This document together with the
related Account Opening Form contains important terms and conditions that apply
to and constitute the agreement on all Accounts made between the Client and
OPSL. The Client has been advised to read this Agreement carefully and retain
it for the Client’s future reference.
Table of Contents
Part 1 – Definition and Interpretation
Part 2A – Standard Terms and Conditions
Part 2B – Additional Terms and Conditions for
Part 2C – Additional Terms and Conditions for
Part 3A – Risk Disclosure Statement for all
Part 3B – Additional Risk Disclosure
Statement for Margin Client
Part 3C – Additional Risk Disclosure
Statement for eTrade Client
The Client hereby requests OPSL to open
an Account(s) for the Client and agrees to accept and be bound by the following
terms and conditions:
Part 1 – Definition and Interpretation
1. In this Agreement, unless the context otherwise
requires, the following terms shall bear the following meanings:
any securities trading
account(s) including cash account(s), margin account(s) and eTrade account(s)
from time to time opened in the Client’s name and maintained with OPSL
“Account Opening Form”
the account opening form or
other documents (however described) prescribed by OPSL from time to time in
respect of the relevant Client’s application to open one or more Accounts
in relation to a party, an
individual, corporation, partnership or any other form of entity directly or
indirectly controlling, controlled by or under common control with such party
or any of such entities’ directors, officers or employees
this document, the related
Account Opening Form and all other relevant documents (including the fee
schedule) enclosed herewith which terms and conditions shall constitute a
legally binding contract between the relevant Client and OPSL, as may from
time to time be amended, modified or supplemented
the person(s) authorized by
the Client to give instructions to OPSL as notified to OPSL from time to time
in such manner as required by OPSL
Oriental Patron Securities
a day (other than a Saturday)
on which banks in Hong Kong generally are open for business
any Client who has opened
and maintained a cash Account in his name with OPSL
any personal client(s)
and/or corporate client(s) of OPSL including the Cash Client(s), the Margin
Client(s) and the eTrade Client(s) who has executed the related Account
Opening Form (either individually or jointly with others) and agreed to
accept and be bound by the terms and conditions of this Agreement
“Client Data Policy”
to the Personal Data (Privacy) Ordinance (Chapter 486 of the laws of Hong
Kong) and as may from time to time be amended, modified or supplemented
“Code of Conduct”
the Code of Conduct for
Persons Licensed by or Registered with the SFC in force from time to time
in respect of any Account,
the state of any Account that has recorded no trading activity for a
continuous period of thirty six (36) months
“Electronic Trading Services”
a facility which enables
the Client to give Instructions to purchase and sell or to dispose Securities
through electronic means including but not limited to the internet, wire or
wireless applications and to receive relevant information from OPSL and/or
other third party service providers
any Client who has opened
and maintained a eTrade Account in his name with OPSL and thus the Client is
allowed to use the Electronic Trading Services provided by OPSL
the Stock Exchange of Hong
Hong Kong Securities Clearing
the Special Administrative
Region of Hong Kong of the People’s Republic of China
any instruction(s) given by
the Client and/or the Authorized Person(s) for buying, selling, other
disposition or dealing of any Securities and other order(s) incidental
any Client who has opened
and maintained a margin Account in his name with OPSL
shall have the meanings
ascribed to it under the SFO
the Securities and Futures
the Securities and Futures
Ordinance (Chapter 571 of the Laws of Hong Kong)
any transaction(s) in
Securities and other transaction(s) incidental thereof which OPSL effects for
or on behalf of the Client
headings of this Agreement are inserted for convenience only and shall be
ignored in construing this Agreement.
expression “the Client(s)” shall, where the context permits, include their
respective successors, personal representatives and permitted assigns.
the context otherwise requires, references in this Agreement to the singular
shall be deemed to include references to the plural and vice versa; references to one gender shall include all genders and
references to any person shall include an individual, firm, body corporate or unincorporated.
to any statute or statutory provision shall include any statute or statutory
provision which amends or replaces or has amended or replaced it and shall
include any subordinate legislation made under the relevant statute.
in this Agreement to clauses, schedules and exhibits are references to clauses,
schedules and exhibits of this Agreement.
to “other”, “include” and “including” in this Agreement shall not be construed
restrictively although they are respectively preceded or followed by words or
examples indicating a particular class of acts, matters or things.
to times of a day are, unless otherwise provided herein, to Hong Kong time.
Part 2A – Standard Terms
1.1 These terms form the standard terms and conditions of this
Agreement and unless the context otherwise stated, shall be binding on all
Clients and/or OPSL. If the Client is allowed to engage in margin trading
and/or to use Electronic Trading Services provided by OPSL, the Client shall be
further subject to the terms and conditions set out respectively in Part 2B
and/or Part 2C hereof. If there is any inconsistency, the provisions for a
particular service will prevail over general provisions.
1.2 The Client agrees to and hereby irrevocably appoint OPSL with
full power and authority as the Client’s true and lawful attorney, to the
fullest extent permitted by law, to act for and on the Client’s behalf for the
purpose of carrying out the provisions of this Agreement and taking any action
and execution any document or instrument in his name or in OPSL’s own name
which OPSL may deem necessary or desirable to accomplish the purposes of this
2.1 The Client confirms that all information provided in relation
to the Account including information in the related Account Opening Form is
complete and accurate. The Client will inform OPSL in writing of any changes to
that information. It is the Client’s responsibility to ensure Account accuracy
and to notify OPSL immediately with regard to any discrepancies.
2.2 OPSL is authorized to conduct credit enquiries or check on
the Client for the purpose of ascertaining the financial situation and
investment objectives of the Client and to verify the information provided. The
Client also understands that OPSL may provide the Client’s information to
credit reference agencies and in the event of default to a debt collection
2.3 OPSL will keep information relating to the Account
confidential, but may provide any such information to the regulators, law enforcement
agencies and other competent authorities, including but not limited to the
Exchange, the SFC and Independent Commission Against Corruption to comply with
their requirements or requests for information or to any persons pursuant to
any court orders or statutory provisions, even if the Account has been
terminated prior to such request.
2.4 The Client’s private information is collected and used by
OPSL in accordance with OPSL’s Client Data Policy a copy of which is available
Applicable Laws and Rules
3.1 All Transactions will be effected in accordance with all
laws, rules, regulatory directives, bye-laws, customs and usages applying to OPSL.
This includes the rules, codes and guidance of the Exchange, HKSCC and SFC from
time to time. All actions taken by OPSL in accordance with such laws, rules, regulatory
directives, bye-laws, customs and usages will be binding on the Client. The
Client also agrees that irrespective of his country of domicile (or if the
Client is a company, its place of incorporation), any dispute with OPSL may at
OPSL’s discretion be referred to the SFC, and not other securities regulators
in any jurisdictions.
3.2 This Agreement is governed by, and may be enforced in
accordance with, the laws of Hong Kong.
3.3 If the Client is an individual domiciled or a company
incorporated outside Hong Kong, the Client shall, immediately upon demand by
OPSL, appoint a person or an agent in Hong Kong to be his or its process agent
to receive all notices and communications relating to any legal proceedings
involving the Client, and the Client agrees that any service of any legal
process on the process agent shall constitute sufficient service on the Client
for purpose of legal proceedings in the Hong Kong courts.
3.4 No provision of this Agreement shall operate to remove,
exclude or restrict any of the Client’s rights or obligations of OPSL under the
laws of Hong Kong.
Instructions and Transactions
will act as the Client's agent in effecting Transactions unless OPSL indicates
(in the combined daily statement which includes the contract notes and receipts
for the relevant Transaction or otherwise) that OPSL is acting as principal.
Client agrees that OPSL shall not be accountable to the Client for any
commissions, remuneration, rebates or other benefits which OPSL may receive
from or offer to any person in respect of any Transaction or business conducted
with the Client or on the Client’s behalf.
Client agrees that OPSL (including OPSL’s directors, officers, licensed
representatives and employees) does not provide tax, legal or investment advice
nor does OPSL give advice or offer any opinion or recommendation with respect
to the suitability of any Securities or Transactions. The Client agrees that
the Client, independently and without reliance on OPSL, makes his own decisions
and judgments with respect to his Instructions. Should the Client need
investment advice from OPSL, a separate agreement has to be made between the
Client and OPSL.
Client or the Client’s Authorized Person(s) may give Instructions to OPSL
(which OPSL may in its absolute discretion reject) to effect Transactions or
other transactions for the Client. OPSL may act on such Instructions given
orally, in writing or electronically which purport, and which OPSL reasonably
believes to come from the Client or the Client’s Authorized Person(s) or to
have been given on behalf of the Client. OPSL will not be under any duty to
verify the capacity of the person(s) giving those Instructions.
otherwise inform OPSL in writing, the Client confirms that the Client is the
beneficial owner of the Securities under his Account free from any lien,
charge, equity or encumbrance save as created by or under this Agreement and is
ultimately responsible for originating the Instruction in relation to all Transactions.
If, in relation to any particular Transaction in the Client’s Account, the
Client is not the person or entity (legal or otherwise) ultimately responsible
for originating the Instruction or the person or entity (legal or otherwise)
that stands to gain its commercial or economic benefit and/or bear its
commercial or economic risk, the Client undertakes and agrees to provide
information on the identity, address and contact and other details of such
person or entity to OPSL before giving the Instruction to OPSL. The Client also
undertakes and agrees to provide such information to OPSL, or direct to the
relevant exchange, government agencies or regulators within two (2) days of
OPSL’s written request and such undertaking and agreement will survive any
termination of this Agreement.
Client confirms that until such time as OPSL receives written notice from the
Client to the contrary in respect of one or more specific Transactions, the
Client will not give OPSL any Instruction to sell securities which is a short
selling order (as defined in section 1 of Part 1 of Schedule 1 to the SFO) to
be executed at or through the Exchange.
prejudice to Clause 4.6 above, in respect of each short selling order to be
transacted at or through the Exchange upon the Client’s Instruction, the Client
understands the relevant provisions of sections 170 and 171 of the SFO and its
related subsidiary legislation and agrees to ensure compliance with the same by
the Client and any other relevant persons.
Transactions, the Client will pay OPSL's commissions and charges, as notified
to the Client, as well as applicable fees and levies imposed by the Exchange
and/or the SFC, and all applicable stamp duties. OPSL may deduct such
commissions, charges, levies, fees and duties from the Account. The Client
acknowledges and agrees that the commission rates and fees are determined and
set solely by OPSL, the Exchange, the SFC and other government agencies, and
are subject to change at any time.
may determine the priority in the execution of the Client’s Instructions having
due regard to market practice, applicable regulations and fairness to all
may, without prior notice to the Client, combine for execution the Client’s
Instructions with the Instructions of other Clients. This may result in a more
favorable or less favorable price being obtained for the Client than executing
the Client’s Instructions separately. Where there are insufficient Securities
to satisfy the Instructions so combined, the Transactions will be allocated
between Clients with due regard to market practice and fairness to Clients.
will not be liable for any delay or failure in the transmission of Instructions
due to breakdown or collapse of communication facilities or for any other delay
or failure beyond the control of OPSL.
reason of physical restraints and rapid changes of Securities prices, OPSL may
not always be able to execute the Client’s Instructions in full or at the
prices quoted at any specific time or “at best” or “at market” and the Client
agrees to be bound by such executions.
Instructions in respect of the Transactions given by the Client are good for
the day on which they were given. They will be automatically cancelled if not
executed by the close of trading on the Exchange or such other expiration date
required by the Exchange. OPSL may execute these Instructions at any time prior
to their automatic cancellation or receipt of cancellation Instructions, and
the Client accepts full responsibility for the Transactions so executed.
Client may request to cancel or amend their Instructions in respect of the
Transactions but OPSL may at its discretion (such discretion not to be
exercised in an unreasonable manner) refuse to accept any such request. These
Instructions may be cancelled or amended only before execution. Cancellation of
market Instructions is rarely possible as they are subject to immediate
execution. In the case of full or partial execution of the Client’s
Instructions before cancellation, the Client accepts full responsibility for
the executed Transactions and OPSL shall incur no liability in connection
Client understands and agrees that OPSL may use a telephone record system to
record conversations and Instructions with the Client and the Client’s
Authorized Persons. The Client acknowledges and warrants that each Authorized
Person also consents to such recording.
Client may request OPSL to subscribe for Securities offerings on the Client’s
behalf. OPSL may be required to provide warranty or make representation in
respect of such application, including but not limited to the following:
(a) that OPSL
has due authority to make such application on the Client’s behalf;
(b) that no
other application is being made for the Client’s benefit whether by the Client
himself or by any other person other than the application submitted on the
The Client hereby expressly authorizes OPSL to provide
such warranty and representation to the Exchange or issuer of the relevant
Securities. The Client acknowledges that the aforesaid declaration will be
relied upon by the issuer of the relevant Securities in deciding whether or not
to make any allotment of Securities in response to the application made by OPSL
as the Client’s agent.
Client’s request, OPSL may provide financial accommodation to facilitate the
subscription of Securities offerings, and, where applicable, for the continued
holding of those Securities under a separate agreement to be made between the
Client and OPSL.
Client understands that OPSL generally does not accept stop-loss orders. If
such orders are accepted, OPSL does not guarantee the execution of such orders.
Client agrees that OPSL may, in its discretion and without giving the Client
prior notice, prohibit or restrict the Client’s ability to trade Securities
through the Account. The Client agrees that OPSL is not liable for any losses
and/or damages, actual or hypothetical, as a result of such restrictions.
otherwise agreed, in respect of each Transaction, unless OPSL is already
holding sufficient cash or Securities on the Client's behalf to settle the
Transaction, the Client will:
(a) pay OPSL
cleared funds or deliver Securities to OPSL in deliverable form; or
ensure that OPSL has received such funds or Securities.
time as OPSL has notified the Client in relation to that Transaction. If the
Client fails to do so, OPSL may on behalf of the Client:
case of a purchase Transaction, sell the purchased Securities; and
case of a sale Transaction, borrow and/or purchase Securities in order to
settle the Transaction.
5.2 The Client will indemnify OPSL against any losses, costs,
fees and expenses resulting from the Client's settlement failures.
5.3 The Client agrees to pay a penalty charge for each settlement
failure at such rates and on such other terms as OPSL has stipulated at its
discretion and notified the Client from time to time.
5.4 The Client agrees to pay interest on all overdue balances
(including interest arising after a judgment debt is obtained against the
Client) at such rates and on such other terms as OPSL has stipulated at its
discretion and notified the Client from time to time. The Client agrees to pay
for the costs and expenses of collection of the overdue balances and any unpaid
deficiency in the Account(s), including without limited to attorney’s fees,
court costs and any other costs incurred or paid by OPSL.
5.5 The Client acknowledges that delivery of any Securities that
OPSL may have purchased on behalf of the Client from the selling party is not
guaranteed. In the case that OPSL has confirmed with the Client that the
relevant purchase Transaction was completed but the selling party or its broker
fails to deliver on the settlement date and OPSL has to purchase the Securities
to settle the Transaction, the Client will not be responsible to OPSL for the
costs of such purchase.
Safekeeping of Securities
Securities which are held by OPSL for safekeeping may, at OPSL's discretion:
(a) (in the
case of registrable Securities) be registered in the Client's name or in the
name of OPSL's nominee; or
deposited, at the Client’s costs, in safe custody in a designated account with OPSL's
bankers or with any other institution which provides facilities for the safe custody
of documents. In the case of Securities in Hong Kong, such institution shall be
approved by the SFC as a provider of safe custody services.
6.2 Where Securities are not registered in the Client's name, any
dividends or other benefits arising in respect of such Securities shall, when
received by OPSL, be credited to the Client's Account or paid or transferred to
the Client after deduction of the relevant charges, as agreed with OPSL. Where
the Securities form part of a larger holding of identical Securities held for the
Clients, the Client will be entitled to the same share of the benefits arising
on the holding as the Client's share of the total holding.
6.3 The Client agrees to pay service charges upon the Account at
such rates and on such other terms as OPSL has stipulated at its discretion and
notified the Client from time to time in respect of the safe custody services.
for the Margin Client, OPSL as a broker who does not have the Client's written
authority pursuant to section 7(2) of the Securities and Futures (Client
Securities) Rules shall not:
any of the Client's Securities with a banking institution as collateral for an
advance or loan made to OPSL, or with the HKSCC as collateral for the discharge
of OPSL's obligations under the clearing system;
or lend any of the Client's Securities; and
part with possession (except to the Client or on the Client's Instructions) of
any of the Client's Securities for any purpose.
to settlement of all outstanding balances of any and all of the Accounts owing
to OPSL (if any), Securities purchased for the Client will be delivered to the
Client provided that:
Securities are fully paid; and
Securities are not subject to any lien.
Cash Held for the Client
7.1 Any cash held for the Client, other than cash received by OPSL
in respect of settling a Transaction and/or fulfilling other debt obligations
by the Client, will be credited to a client trust account maintained with a
licensed bank as required by applicable laws from time to time.
to any written agreement to the contrary, the Client hereby agrees that, OPSL
shall be entitled at any time and from time to time withhold, withdraw and
retain for its own use and benefit absolutely any and all interest at any time
and from time to time earned, accrued, paid, credited or otherwise derived from
the retention at any time or from time to time of any and all amounts:
for the Account(s) of the Client in respect of dealing in Securities﹔
on account of the Client﹔
trust account established by OPSL under the SFO﹔
or held by OPSL or any of OPSL’s nominees, agents, representatives,
correspondents or bankers for or on account in any other circumstances, for any
purpose or pursuant to any Transaction.
the Client consists of more than one person:
liability and obligations of each of them shall be joint and several and
references to the Client shall be construed, as the context requires, to any or
each of them;
shall be entitled to, but shall not be obliged to, act on Instructions or any
other requests from any of them;
them shall be bound though any other Client or any other person intended to be
bound is not, for whatever reason, so bound; and
notice, payment or delivery by OPSL to either any one the joint Account holders
shall be a full and sufficient discharge of OPSL’s obligations to notify, pay
or deliver under this Agreement.
8.2 Where the Client consists of more than one person, on the
death of any of such persons (being survived by any other such persons), this
Agreement shall not be terminated and the interest in the Account of the
deceased will thereupon vest in and enure for the benefit of the survivor(s) provided
that any liabilities incurred by the deceased Client shall be enforceable by OPSL
against such deceased Client's estate. The surviving Client(s) shall give OPSL
written notice immediately upon any of them becoming aware of any such death.
Lien, Set-off and Combination of Accounts
Securities held for the Account shall be subject to a lien by way of first
fixed charge in OPSL's favour, for the performance of the Client's obligations
to OPSL arising in respect of dealing in Securities for the Client. In
addition, OPSL shall have a lien by way of first fixed charge over any and all
Securities, acquired on the Client’s behalf, or in which the Client has an
interest (either individually or jointly with others) which are held for the
Accounts and all cash and other property at any time held by OPSL on the Client’s
behalf, all of which shall be held by OPSL as a continuing security for the
payment and/or discharge of the Client’s obligations to OPSL arising from the
business of dealing in Securities and all stocks, shares (and the dividends or
interest thereon) rights, monies or property accruing or offered at any time by
way of redemption, bonus, preference, option or otherwise to or in respect of
such Securities. Upon default by the Client in payment on demand or on the due
date therefor of any of the Client’s indebtedness to OPSL or any default by the
Client hereunder, OPSL shall have the right, acting in good faith, to sell or
otherwise dispose the whole or any part of such security as when and how and at
such price and on such terms as OPSL shall think fit and to apply the net
proceeds of such sale or disposition and any moneys for the time being in OPSL’s
hands in or towards discharge of the Client’s indebtedness to OPSL.
to the provisions of the SFO and relevant rules made thereunder and without
prejudice to any of the rights OPSL may have, OPSL shall be entitled and
authorized to, at any time or from time to time and without prior notice to the
Client, notwithstanding any settlement of Account or other matter whatsoever,
combine or consolidate any or all of the Accounts (of whatever nature and
whether held individually or jointly with others) maintained with OPSL and
set-off or transfer any money, securities or other property standing to the
credit of any one or more of such Accounts in or towards satisfaction of the
indebtedness, obligations or liabilities of the Client towards OPSL on any
other Accounts whether such indebtedness, obligations or liabilities be present
or future, actual or contingent, primary or collateral, several or joint and
secured or unsecured. Where such set-off, consolidation, combination or
transfer requires the conversion of one currency into another, such conversion
shall be calculated at the rate of exchange conclusively determined by OPSL to
10.1 OPSL may from time to time in its absolute discretion add,
amend, delete or substitute any of the terms and conditions of this Agreement
by giving the Client notice of such changes which will become effective from
the date specified in such notice.
10.2 The Client acknowledges and agrees that if the Client does not
accept any amendments (including the amendments to OPSL’s commission rates and
fees etc.) as notified by OPSL from time to time, the Client shall have the
right to terminate this Agreement in accordance with the termination clause
under this Agreement. The Client further agrees that any amendments shall be
deemed to be accepted by the Client, should OPSL continue to effectuate any
Transaction(s) in the Account without being expressly communicated with the
Client’s objections to such amendments prior to the Transaction(s).
Limitation of Liability and Indemnity
11.1 OPSL shall not be liable for any delay or failure to perform
their obligations or any losses, damages or costs resulting therefrom so long
as they have acted in good faith. Moreover, OPSL shall not be held responsible
for any consequences resulting whether directly or indirectly from any
uncontrollable events including without limitation government restrictions,
imposition of emergency procedures, exchange ruling, third party conduct,
suspension of trading, breakdown or collapse of communication facilities, war,
strike, market conditions, civil order, acts or threatened acts of terrorism,
natural disasters, or any other circumstances beyond OPSL’s control whatsoever.
11.2 The Client further agrees that OPSL (including OPSL’s
directors, officers, licensed representatives and employees) shall not be
liable in respect of any information rendered, whether such information was
given at the Client’s request.
11.3 The Client shall fully indemnify OPSL (including OPSL’s
directors, officers, licensed representatives and employees) against all
claims, actions, liabilities (whether actual or contingent) and proceedings
against any one of them and bear any losses, costs, charges or expenses
(including legal fees) which any one of them may suffer or incur in connection
with their carrying out of obligations or services, or exercise of rights,
powers or discretion under this Agreement, including any action taken by OPSL
to protect or enforce its rights, or its security interest under this
Agreement, whether or not as a result of any default or breach of the Client.
amounts owing by the Client to OPSL together with interest become immediately
due and payable without any notice or demand upon any one of the following
events of default:
OPSL’s opinion, the Client has breached any material term of this Agreement or
defaulted in respect of any transaction with or through OPSL;
representation, warranty or undertaking to OPSL was when given or hereafter
becomes incorrect in any material respect;
compliance with any rules or regulations of any relevant exchange or clearing
event of the Client’s death (in the case of joint Account, Clause 8.2 of this
Agreement shall apply) or being declared incompetent or a petition in bankruptcy
is filed by or against the Client or an order is made or resolution passed for
the Client’s voluntary or compulsory winding up or a meeting is convened to
consider a resolution that the Client should be so wound up;
warranty or order of attachment or distress or equivalent order is issued
against any of the Client’s Accounts with OPSL; or
the Client’s Account has become Dormant and the balance of which is zero (i.e.
neither cash nor Securities are maintained in the Account) or negative (i.e. in
the case that the Client has indebtedness owing to OPSL).
and upon the occurrence of any of such
events (collectively referred to as “Default”),
OPSL shall be entitled in its absolute discretion, without notice or demand and
without prejudice to any other rights or remedies available to OPSL, forthwith
realize all or any part of the Client’s property held by OPSL in such manner
and upon such terms as OPSL may conclusively decide and satisfy the Client’s
obligations and indebtedness towards OPSL out of the net proceeds (with fees,
expenses and costs deducted) thereof;
any open orders for the purchase or sale of Securities;
any or all Securities long in the Account;
or all Securities which may be short in the Account; and/or
any of its rights under this Agreement.
party may terminate this Agreement at any time on the giving of not less than
seven (7) Business Days’ prior written notice to the other. However, OPSL may
terminate this Agreement forthwith at any time without notice to the Client in
the case of Default committed by the Client.
termination shall not affect any transaction entered into, or prejudice or
affect any right, power, duty and obligation of either party accrued, prior to
termination of this Agreement, the Client will immediately pay to OPSL any and
all amounts due or owing to it.
of any cash or Securities balances in the Account upon termination of this
Agreement by way of notice (other than as a result of Default), the Client
agrees to withdraw such balances within seven (7) days from the date of such
termination. If the Client does not do so, the Client agrees that OPSL may on
behalf of the Client and without any responsibility for any loss or consequence
on its part sell or dispose of the Client’s Securities in the market or in such
manner and at such time and price as OPSL may reasonably determine and send to
the Client at the Client’s sole risk its cheque representing any net sale
proceeds and credit balances in the Accounts to the Client’s last known
Notices and Communication
notice or communication given by OPSL to the Client shall be deemed made or
if made by letter, upon
delivery to the Client by hand or if sent by prepaid mail, within two (2) days
if the Client is in Hong Kong or within five (5) days if the Client is outside
Hong Kong; and
if made by telex,
facsimile, electronic mail or other electronic means, upon transmission of the
message to or accessible by the Client.
may also communicate with the Client verbally. The Client is deemed to have
received any message left for the Client on the Client’s answer machine,
voicemail or other similar electronic or mechanical devices at the time it is
left for the Client.
notice or communications made or given by the Client will be sent at the Client’s
own risk and will be effective only upon actual receipt by OPSL.
otherwise inform OPSL in writing, the Client expressly consent to OPSL sending
any notice, documents or communication to the Client by electronic means.
Client agrees to check regularly the Client’s mailbox, electronic mailbox,
facsimile machine and other sources of facilities through which the Client
receives communication from OPSL. OPSL will not be responsible for any losses
that arise from the Client’s failures, delay or negligence to check such
sources or facilities.
Client understands, for the security and integrity of the Account, that OPSL
may temporarily or permanently disable or restrict the Account, if and when the
mails become undeliverable or are returned as a result of the Client’s failure
to provide, update and/or notify OPSL with most current and accurate Account
Client is responsible for reviewing all acknowledgements, confirmations,
contract notes and Account statements in relation to the Client’s Transactions
and other Account activities information upon first receiving them. All
Transactions and other information therein contained will be binding on the
Client unless OPSL receives the Client’s notice of objection in writing within
seven (7) days after the Client receives or deemed to have received them. In
all cases, OPSL reserves the right to determine the validity of the Client’s
objection to the relevant Transaction or information.
All currency exchange risks in respect of
any Transactions, settlement actions or steps taken by OPSL under this
Agreement shall be borne by the Client.
commits a default as defined in the SFO and the Client thereby suffers a
pecuniary loss, the Client will have a right to claim under the Compensation
Fund established under the SFO, subject to the terms of the Compensation Fund
from time to time.
OPSL and the Client undertakes to notify the other in the event of any material
change to the information (as specified in paragraphs 6.2(a), (b), (d), (e) and
(f) of the Code of Conduct) provided in this Agreement.
terms and conditions of this Agreement shall survive any changes or succession
in the Client's business, including the Client's bankruptcy or death and will
be binding on the Client's successor(s), personal representative(s) or
Time shall be of
essence in relation to all matters arising under this Agreement.
of any right under this Agreement must be in writing signed by the party
waiving such right. The rights, powers, remedies and privileges in this
Agreement are cumulative and not exclusive of any rights, powers, remedies and
privileges provided by law. Any failure or delay in exercising all or part of
any right, power or privilege in respect of this Agreement will not be presumed
to operate as a waiver to preclude any subsequent exercise of that right, power
the provisions in this Agreement is several and distinct from the others and if
any one or more of such provisions is or becomes invalid or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
shall have the right to assign, transfer or otherwise dispose of all or any of
its rights, interests or obligations in or under this Agreement to its
Affiliates as it thinks fit and without having to notify the Client or obtain
the Client’s consent. The Client shall not assign, transfer or dispose of the
Client’s rights, interests or obligations in or under this Agreement to any
third party without the prior written consent of OPSL.
Risk Disclosure Statements
The Client acknowledges that the relevant risk disclosure
statements specified in Part 3A hereof form part of this Agreement. If the
Client is allowed to engage in margin trading and/or to use Electronic Trading
Services provided by OPSL, the Client shall further acknowledge the relevant
risk disclosure statements set out respectively in Part 3B and/or Part 3C
Representation, Warranties and Undertakings
The Client represents that he is of required
legal age and mentally fit to enter into this Agreement. If the Client is a
corporate client, it has obtained all necessary consents from shareholders and
directors and has taken all necessary actions to enable the Client to enter into
this Agreement and perform its obligations under this Agreement.
Save as disclosed in the Account Opening
Form, the Client represents and warrants to OPSL that the Client is not
associated with any directors, employees or licensed representatives of OPSL or
its associated companies and agrees that if the Client is or becomes associated
with any of such directors, employees or licensed representatives, the Client
shall promptly notify OPSL of the existence and nature of such association and
acknowledge that OPSL may, upon receipt of such notice, at OPSL’s discretion,
choose to terminate the Account. If the Client is a corporate client, the
expression “Client” in this Clause 17.2 and Clause 17.3 below shall include any
of the Client’s directors, shareholders or Authorized Persons.
The Client represents that, unless the
Client has previously disclosed in writing to OPSL, the Client is not a
director or employee of any exchange, clearing house or any licensed or
registered person under the SFO.
This Agreement and its performance and the
obligations contained in this Agreement do not and will not contravene any
applicable law and regulations, any provisions of the Client’s memorandum and
articles of association or by-laws (where applicable), or constitute a breach
of default under any agreement or arrangement by which the Client is so bound.
The Client will not charge, pledge or allow
to subsist any charge or pledge over the Client’s Securities or monies in the
Account or grant or purport to grant an option over any Securities or monies in
the Account without the prior written consent of OPSL.
All representations and warranties appeared
in this Agreement shall be deemed to be repeated immediately before each
Transaction or dealing is carried out for or any service is provided to the
Client or on the Client’s behalf.
Part 2B – Additional Terms and Conditions for Margin
1. In addition to Part 2A of this Agreement, this Part 2B sets
out the terms and conditions to which the Client shall be further subject upon
the Client opening a margin Account with OPSL in relation to Transactions
carried out in connection therewith and the Client shall in this Part 2B be
referred to as Margin Client.
2. The Margin Client shall on demand from OPSL make payments
of deposits or margin in cash, Securities or otherwise in amounts agreed with
OPSL or which may be required by the rules of any exchange or market of which OPSL
is a member.
3. The Margin Client shall be granted facilities up to 50 per
cent. or such percentage as may be determined by OPSL from time to time of the
market value of the collateral maintained with OPSL.
4. OPSL shall not, without the Margin Client's prior written
consent, deposit any of the Margin Client's Securities as security for any
loans or advances made to OPSL, or lend or otherwise part with the possession
of any of the Margin Client's Securities for any purpose. Such written consent
shall be in the form appearing in the “Authorisation Letter from Margin
Part 2C – Additional
Terms and Conditions for eTrade Client
addition to Part 2A of this Agreement, this Part 2C sets out the terms and
conditions to which the Client shall be further subject upon the Client opening
a eTrade Account with OPSL in relation to Transactions carried out in
connection therewith and the Client shall in this Part 2C be referred to as
Client consents to the use of the Electronic Trading Services as a medium of
communication with OPSL and to transmit information, data and document (for
avoidance of doubt, the transmission of document includes but does not limit to
sending the contract note, trading confirmation, statement of the Account and
other documents in electronic form through any electronic means) to the eTrade
Client accepts the risk of receiving or gaining access to services through and
communication and conducting Transactions over the internet or other electronic
means or facilities.
Client acknowledges that information concerning the use, operation, policy and
procedures of the Electronic Trading Services and the Account applicable at all
time has been made available to the eTrade Client on the service website or
other applicable wire or wireless facilities, and have read and understood the
terms of which may be amended, modified and supplemented from time to time and
which shall be binding on the eTrade Client in respect of the eTrade Client's
use of the Electronic Trading Services and the Account. In the event of
inconsistencies between the terms of this Agreement and the information, the
terms of this Agreement shall prevail.
eTrade Client shall not and shall not attempt to tamper with, modify,
de-compile, reverse engineer or otherwise alter in any way, or gain
unauthorized access to, the Electronic Trading Services.
Client shall be the only authorized user of the Electronic Trading Services,
and acknowledges that the services may require the eTrade Client to use various
identification and access codes, including a password, account identification
number and other user identification to access the service and the Account and
that the eTrade Client shall be responsible for the confidentiality and proper
use at all time of the eTrade Client's password, account identification number,
user identification and account number for all Transactions initiated through
the Electronic Trading Services.
Client agrees to notify OPSL immediately of the eTrade Client's becoming aware
of any loss, theft or unauthorized use of the eTrade Client's password, account
identification number, user identification, Account or account number, or any
unauthorized use of the Electronic Trading Services or any information or data
Client acknowledges that any information and data (including news and real time
quotes) provided through the Electronic Trading Services relating to Securities
and securities markets are obtained from any
securities exchanges and markets and from other third party service providers
appointed by OPSL from time to time. The eTrade Client further acknowledges and
information and data are or may be protected by copyright laws, and are
provided for personal non-commercial use only, and the eTrade Client may not use,
reproduce, retransmit, disseminate, sell, distribute, publish, broadcast,
circulate or commercially exploit any information or data in any way without
the consent of such service providers.
information and data are received by OPSL from sources that are believed to be
reliable, however neither the accuracy, completeness, timeliness or sequence of
any of the information or data can be guaranteed either by OPSL or by such
Client acknowledges and agrees that neither OPSL nor any of the services
providers shall be liable to the eTrade Client for any reliance by the eTrade
Client on any of the information or data provided through the Electronic
Trading Services nor for availability, accuracy, completeness or timeliness of
such information or data nor any actions taken or decisions made by the eTrade
Client in reliance of such information or data.
not obliged to execute the eTrade Client's Instructions until there are
sufficient cleared funds or Securities in the eTrade Client's Account to settle
the eTrade Client's Transactions.
Client acknowledges and agrees that OPSL shall not be deemed to have received or
executed the eTrade Client's Instructions unless and until the eTrade Client
has received OPSL's message acknowledging receipt or confirming execution of
the eTrade Client's Instructions.
Client acknowledges and agrees that if the Electronic Trading Services becomes
temporarily unavailable, the eTrade Client may during such period continue to
operate the Account subject to OPSL's right to obtain such information
regarding the verification of the eTrade Client's identity to OPSL's
Client agrees that OPSL shall not be liable for any loss the eTrade Client may
suffer as a result of using or attempting to use the Electronic Trading
Services. The eTrade Client further undertakes to indemnify OPSL in full for
any loss or damage OPSL may suffer as a result of the use of the Electronic
Trading Services, save for damages caused by willful default on OPSL's part.
Part 3A – Risk Disclosure Statements for all Clients
The Client should be aware
of the following potential risks in connection with securities trading.
Risk of securities trading
The prices of securities
fluctuate, sometimes dramatically. The price of a security may move up or down,
and may become valueless. It is as likely that losses will be incurred rather
than profit made as a result of buying and selling securities.
trading Growth Enterprise Market stocks
Growth Enterprise Market
(GEM) stocks involve a high investment risk. In particular, companies may list
on GEM with neither a track record of profitability nor any obligation to
forecast future profitability. GEM stocks may be very volatile and illiquid.
The Client should make the
decision to invest only after due and careful consideration. The greater risk
profile and other characteristics of GEM mean that it is a market more suited
to professional and other sophisticated investors.
Current information on GEM
stocks may only be found on the internet website operated by the Exchange. GEM
Companies are usually not required to issue paid announcements in gazetted
The Client should seek
independent professional advice if the Client is uncertain of or have not
understood any aspect of this risk disclosure statement or the nature and risks
involved in trading of GEM stocks.
client assets received or held outside Hong Kong
Client assets received or
held by OPSL outside Hong Kong are subject to the applicable laws and
regulations of the relevant overseas jurisdiction which may be different from
the Securities and Futures Ordinance (Cap.571) and the rules made thereunder.
Consequently, such client assets may not enjoy the same protection as that
conferred on client assets received or held in Hong Kong.
providing an authority to hold mail or to direct mail to third parties
If the Client provides OPSL
with an authority to hold mail or to direct mail to third parties, it is
important for the Client to promptly collect in person all contract notes and statements
of the Client’s account and review them in detail to ensure that any anomalies
or mistakes can be detected in a timely fashion.
trading NASDAQ-AMEX securities at the Exchange
The securities under the
Nasdaq-Amex Pilot Program (“PP”) are aimed at sophisticated investors. The
Client should consult OPSL and become familiarized with the PP before trading
in the PP securities. The Client should be aware that the PP securities are not
regulated as a primary or secondary listing on the Main Board or the GEM of the
Part 3B – Additional
Risk Disclosure Statements for Margin Client
In addition to Part 3A, the
Margin Client should be aware of the following potential risks in connection
with margin trading.
providing an authority to repledge the Client’s securities collateral etc.
There is risk if the Client
provides OPSL with an authority that allows it to apply the Client's securities
or securities collateral pursuant to a securities borrowing and lending
agreement, repledge the Client’s securities collateral for financial
accommodation or deposit the Client’s securities collateral as collateral for
the discharge and satisfaction of its settlement obligations and liabilities.
If the Client’s securities
or securities collateral are received or held by OPSL in Hong Kong, the above
arrangement is allowed only if the Client consent in writing. Moreover, unless
the Client is a professional investor, the Client’s authority must specify the
period for which it is current and be limited to not more than twelve (12)
months. If the Client is a professional investor, these restrictions do not
Additionally, the Client’s
authority may be deemed to be renewed (i.e. without the Client’s written
consent) if OPSL issues the Client a reminder at least fourteen (14) days prior
to the expiry of the authority, and the Client does not object to such deemed
renewal before the expiry date of the Client’s then existing authority.
The Client is not required
by any law to sign these authorities. But an authority may be required by OPSL,
for example, to facilitate margin lending to the Client or to allow the
Client’s securities or securities collateral to be lent to or deposited as
collateral with third parties. OPSL should explain to the Client the purposes
for which one of these authorities is to be used.
If the Client signs one of
these authorities and the Client’s securities or securities collateral are lent
to or deposited with third parties, those third parties will have a lien or
charge on the Client’s securities or securities collateral. Although OPSL is
responsible to the Client for securities or securities collateral lent or
deposited under the Client’s authority, a default by it could result in the
loss of the Client’s securities or securities collateral.
A cash account not
involving securities borrowing and lending is available from most licensed or
registered persons. If the Client does not require margin facilities or does
not wish the Client’s securities or securities collateral to be lent or
pledged, the Client should not sign the above authorities and ask to open this
type of cash account.
Risk of margin
The risk of loss in financing a transaction by deposit
of collateral is significant. The Client may sustain losses in excess of the
Client's cash and any other assets deposited as collateral with OPSL. Market
conditions may make it impossible to execute contingent orders, such as
“stop-loss” or “stop-limit” orders. The Client may be called upon at short
notice to make additional margin deposits or interest payments. If the required
margin deposits or interest payments are not made within the prescribed time,
the Client's collateral may be liquidated without the Client's consent.
Moreover, the Client will remain liable for any resulting deficit in the
Client's account and interest charged on the Client's account. The Client should therefore carefully
consider whether such a financing arrangement is suitable in light of the
Client's own financial position and investment objectives.
Part 3C – Additional
Risk Disclosure Statements for eTrade Client
In addition to Part 3A, the
eTrade Client should be aware of the following potential risks in connection
with the use of Electronic Trading Services.
Risk of electronic trading services
The access, communication
and conducting transactions over the internet or other electronic means or
facilities involve the use of public networks and represent an attractive
target for attacks by intruders. Should intruders infiltrate the electronic
trading system of OPSL and obtain sensitive data and information or create bugs
or virus which sabotages its function, the electronic trading system (including
the Client's account) may be damaged. While various steps and procedures (e.g.
the use of login password, cryptography, firewall) have been taken and/or
implemented by OPSL to protect unauthorized access to electronic trading system
and the Client's account, there can be no assurance that such steps and
procedures can prevent or respond to all forms of attacks in a timely or
Internet or any other
electronic means are, due to unpredictable traffic congestion and other
reasons, an inherently unreliable medium of communication and that such
unreliability is beyond the control of OPSL. As a result of such unreliability,
there may be delays in the transmission and receipt of instructions or other
information (e.g. canceling or changing the Client's original instructions),
delays in execution or execution of the Client's instructions at prices
different from those prevailing at the time the Client's instructions were given,
transmission interruption or breakdown and/or for some reason OPSL may not be
able to act on the Client's instructions at all. If the Client subsequently
give instructions canceling or changing the Client's original instructions,
OPSL will not accept them if it has already acted on the Client's original instruction
or there is insufficient time to act on the Client's subsequent instruction.
The Client should therefore give instructions in good time before the closes of
Information and data provided
through the electronic trading services relating to securities and the
securities markets has been obtained from any securities exchanges and markets
and from other third party service providers. Owing to market volatility, possible delay in data transmission process
and other reasons, the information and data may not be accurate, complete,
timely and in correct sequence. Thus any
reliance on such information and data may lead to incorrect investment
decisions and/or other actions.
Risk Disclosure Statements for all Clients
Supplemental to Client Agreement (Specification No.: 2009/1.0_APRIL 2009)
Part 3A – Risk Disclosure Statements for all Clients
Risk of investing in Renminbi-denominated products
A renminbi product is a generic term which may include a wide range of investment products denominated or settled in renminbi or have exposure to renminbi-linked assets or investments. For the avoidance of doubt, “Renminbi-denominated products” shall include “listed Renminbi-denominated securities”.
Investment / market risk: Like any investments, renminbi products are subject to investment risk and may not be principal protected i.e. the assets that the products invest in or referenced to may fall as well as rise, resulting in gains or losses to the product. This means that the Client may suffer a loss even if renminbi appreciates.
Liquidity risk: Renminbi products are also subject to liquidity risk as renminbi products are a new type of product and there may not be regular trading or an active secondary market. Therefore the Client may not be able to sell his investment in the product on a timely basis, or the Client may have to sell the product at a deep discount to its value.
Issuer / counterparty risk: Renminbi products are subject to the credit and insolvency risks of their issuers. The Client should consider carefully the creditworthiness of the issuers before investing. Furthermore, as a renminbi product may invest in derivative instruments, counterparty risk may also arise as the default by the derivative issuers may adversely affect the performance of the renminbi products and result in substantial losses.
Currency risk: In general, a non-Mainland (including Hong Kong) investor who holds a local currency other than renminbi will be exposed to currency risk if he invests in a renminbi product. This is because renminbi is a restricted currency and subject to exchange controls, the Client may have to convert the local currency into renminbi when the Client invests in a renminbi product. When the Client redeems / sells his investment, the Client may also need to convert the renminbi received upon redemption / sale of his investment product into the local currency (even if redemptions / sale proceeds are paid in renminbi). During these processes, the Client will incur currency conversion costs and the Client will also be exposed to currency risk. In other words, even if the price of the renminbi product remains the same when the Client purchases it and when the Clients redeems / sells it, the Client will still incur a loss when the Client converts the redemption / sale proceeds into local currency if renminbi has depreciated. Like any currency, the exchange rate of renminbi may rise or fall. Further, renminbi is subject to conversion restrictions and foreign exchange control mechanism.
Depending on the nature of the renminbi product and its investment objective, there may be other risk factors specific to the product which the Client should consider. Before making an investment decision, always read the risk factors as set out in the offering documents and seek professional advice where necessary.
Risk of Exchange Traded Funds (ETFs)
Market risk: ETFs are typically designed to track the performance of certain indices, market sectors, or groups of assets such as stocks, bonds, or commodities. ETF managers may use different strategies to achieve this goal, but in general they do not have the discretion to take defensive positions in declining markets. Investors must be prepared to bear the risk of loss and volatility associated with the underlying index/assets.
Tracking errors: Tracking errors refer to the disparity in performance between an ETF and its underlying index/assets. Tracking errors can arise due to factors such as the impact of transaction fees and expenses incurred to the ETF, changes in composition of the underlying index/assets, and the ETF manager’s replication strategy. (The common replication strategies include full replication/representative sampling and synthetic replication which are discussed in more detail below.)
Trading at discount or premium: An ETF may be traded at a discount or premium to its Net Asset Value (NAV). This price discrepancy is caused by supply and demand factors, and may be particularly likely to emerge during periods of high market volatility and uncertainty. This phenomenon may also be observed for ETFs tracking specific markets or sectors that are subject to direct investment restrictions.
Foreign exchange risk: Investors trading ETFs with underlying assets not denominated in Hong Kong dollars are also exposed to exchange rate risk. Currency rate fluctuations can adversely affect the underlying asset value, also affecting the ETF price.
Liquidity risk: Securities Market Makers (SMMs) are Exchange Participants that provide liquidity to facilitate trading in ETFs. Although most ETFs are supported by one or more SMMs, there is no assurance that active trading will be maintained. In the event that the SMMs default or cease to fulfill their role, investors may not be able to buy or sell the product.
Counterparty risk involved in ETFs with different replication strategies:
(a) Full replication and representative sampling strategies: An ETF using a full replication strategy generally aims to invest in all constituent stocks/assets in the same weightings as its benchmark. ETFs adopting a representative sampling strategy will invest in some, but not all of the relevant constituent stocks/assets. For ETFs that invest directly in the underlying assets rather than through synthetic instruments issued by third parties, counterparty risk tends to be less of concern.
(b) Synthetic replication strategies: ETFs utilising a synthetic replication strategy use swaps or other derivative instruments to gain exposure to a benchmark. Currently, synthetic replication ETFs can be further categorized into two forms:
(i) Swap-based ETFs:
(aa) Total return swaps allow ETF managers to replicate the benchmark performance of ETFs without purchasing the underlying assets.
(bb) Swap-based ETFs are exposed to counterparty risk of the swap dealers and may suffer losses if such dealers default or fail to honor their contractual commitments.
(ii) Derivative embedded ETFs
(aa) ETF managers may also use other derivative instruments to synthetically replicate the economic benefit of the relevant benchmark. The derivative instruments may be issued by one or multiple issuers.
(bb) Derivative embedded ETFs are subject to counterparty risk of the derivative instruments’ issuers and may suffer losses if such issuers default or fail to honour their contractual commitments.
Even where collateral is obtained by an ETF, it is subject to the collateral provider fulfilling its obligations. There is a further risk that when the right against the collateral is exercised, the market value of the collateral could be substantially less than the amount secured resulting in significant loss to the ETF.
It is important that investors understand and critically assess the implications arising due to different ETF structures and characteristics.
Risk of investing in REITs
A Real Estate Investment Trust (REIT) is a collective investment scheme that aims to deliver a source of recurrent income to investors through focused investment in a portfolio of income-generating real estate such as shopping malls, offices, hotels and service apartments.
Investment risk: A REIT is an investment product. There is no guaranteed return of investment in a REIT and the Client may suffer substantial losses of capital. Distributions received from a REIT may not be sufficient to recoup the Client’s investment capital.
Market risk: Investments in real estate are subject to the risk of the general economic conditions. Any cyclical economic factors may cause fluctuations in occupancy and rental rates of the real estate held by a REIT. This will in turn adversely affect the income derived by a REIT from its real estate investment.
Concentration risk: Where a REIT relies on a single real estate to generate all of its revenue, any circumstance that adversely affects the operations or business of that single real estate, or its attractiveness to tenants, may adversely affect the revenue generated and the REIT will not have income from other real estate to mitigate any ensuing loss arising from such circumstance. A concentration of investment in a single real estate causes the REIT to be highly susceptible to relevant real estate market conditions.
Interest rate risk: Fluctuations in interest rates may increase the interest costs incurred by a REIT in respect of its borrowings and may have an adverse effect on the level of activity in the property market. The financial position of the REIT and its ability to make distributions this may be adversely affected. Moreover, the trading price of the REIT units is likely to decline if there is an increase in interest rates.
Distribution risk: The distributions of a REIT may be made out of capital. The Client should pay attention to the composition of distributions declared by a REIT (for example, the extent to which the distribution declared is composed of, and the types of, income and capital) as disclosed in the relevant results announcement and the financial reports of the REIT.
Risk of Structured Products
Issuer default risk: In the event that a structured product issuer becomes insolvent and defaults on their listed securities, investors will be considered as unsecured creditors and will have no preferential claims to any assets held by the issuer. Investors should therefore pay close attention to the financial strength and credit worthiness of structured product issuers.
Uncollateralised product risk: Uncollateralised structured products are not asset backed. In the event of issuer bankruptcy, investors can lose their entire investment. Investors should read the listing documents to determine if a product is uncollateralised.
Gearing risk: Structured products such as derivative warrants and callable bull/bear contracts (CBBCs) are leveraged and can change in value rapidly according to the gearing ratio relative to the underlying assets. Investors should be aware that the value of a structured product may fall to zero resulting in a total loss of the initial investment.
Expiry considerations: Structured products have an expiry date after which the issue may become worthless. Investors should be aware of the expiry time horizon and choose a product with an appropriate lifespan for their trading strategy.
Extraordinary price movements: The price of a structured product may not match its theoretical price due to outside influences such as market supply and demand factors. As a result, actual traded prices can be higher or lower than the theoretical price.
Foreign exchange risk: Investors trading structured products with underlying assets not denominated in Hong Kong dollars are also exposed to exchange rate risk. Currency rate fluctuations can adversely affect the underlying asset value, also affecting the structured product price.
Liquidity risk: The Exchange requires all structured product issuers to appoint a liquidity provider for each individual issue. The role of liquidity providers is to provide two way quotes to facilitate trading of their products. In the event that a liquidity provider defaults or ceases to fulfill its role, investors may not be able to buy or sell the product until a new liquidity provider has been assigned.
Additional Risk of Trading Derivative Warrants
Time decay risk: All things being equal, the value of a derivative warrant will decay over time as it approaches its expiry date. Derivative warrants should therefore not be viewed as long term investments.
Volatility risk: Prices of derivative warrants can increase or decrease in line with the implied volatility of underlying asset price. Investors should be aware of the underlying asset volatility.
Additional Risks Involved in Trading CBBCs
Mandatory call risk: Investors trading CBBCs should be aware of their intraday “knockout” or mandatory call feature. A CBBC will cease trading when the underlying asset value equals the mandatory call price/level as stated in the listing documents. Investors will only be entitled to the residual value of the terminated CBBC as calculated by the product issuer in accordance with the listing documents. Investors should also note that the residual value can be zero.
Funding costs: The issue price of a CBBC includes funding costs. Funding costs are gradually reduced over time as the CBBC moves towards expiry. The longer the duration of the CBBC, the higher the total funding costs. In the event that a CBBC is called, investors will lose the funding costs for the entire lifespan of the CBBC. The formula for calculating the funding costs are stated in the listing documents.
Risk on Trading A-shares through the Shanghai-Hong Kong Stock Connect Program (“the Program”)
Not protected by Investor Compensation Fund: Investors should note that trading under the Program will not be covered by the Hong Kong Investor Compensation Fund.
Quotas used up: Trading of A-shares through the Program is subject to a maximum cross-boundary investment quota (i.e. Aggregate Quota) and a Daily Quota as prescribed under Rules of Exchange of Hong Kong Exchanges and Clearing Limited (HKEx). When the Aggregate Quota balance is less than the Daily Quota, buy orders will be suspended on the next trading day (sell orders will still be accepted) until the Aggregate Quota balance returns to the Daily Quota level. Similarly, when the Daily Quota is used up, acceptance of buy orders will also be immediately suspended and no further buy orders will be accepted for the remainder of the day. Buy orders which have been accepted will not be affected by the using up of the Daily Quota, while sell orders will continue to be accepted. The Daily Quota will be refreshed and remain the same everyday, subject to the balance of the Aggregate Quota.
Trading day difference: The Program will only operate on days when both markets are open for trading and when banks in both markets are open on the corresponding settlement days. As a result, it is possible that there are occasions when it is a normal trading day for the Mainland market but Hong Kong or international investors cannot carry out any A-share trading. Investors should take note of the days the Program is open for business and decide according to their own risk tolerance capability whether or not to take on the risk of price fluctuations in A-shares during these occasions.
Pre-trade checking on selling: Pre-trade checking on sell orders will be imposed to ensure that the A-shares are available in the CCASS account of the investor’s broker. For investors who usually keep their shares with custodians other than their brokers, , they must transfer the A-shares to the respective accounts of their brokers before the market opens on the day of selling (T day). If they fail to meet this deadline, they will not be able to sell those A-shares on T day.
The recalling of eligible A-shares: Only eligible A-shares are available for trading by Hong Kong or overseas investors under the Program. When a particular A-share is recalled from the scope of eligible stocks for trading, the share can only be sold but restricted from being bought. This may affect the investment portfolio or strategies of investors. Investors should therefore pay close attention to the list of eligible A-shares as provided and renewed from time to time under the Program.
Day trading, naked short selling and off-market trades not allowed: A-shares bought by investors cannot be sold before settlement of the initial buy transactions. As such, day trading of A-shares is not allowed. In addition, investors are prohibited from conducting off-market trades and naked short selling of A-shares.
Shareholding restriction and force-sale arrangement: Under current PRC rules, a single foreign investor’s (i.e. QFII and RQFII) shareholding in a listed company is not allowed to exceed 10% of the company’s total issued shares and all foreign investors’ shareholding is not allowed to exceed 30%. Investors should make sure the shareholding percentage complies with the related restriction. If the aggregate foreign investors’ shareholding exceeds 30%, the foreign investors concerned will be required by the HKEx to sell the relevant shares on a last-in-first-out basis within 5 trading days.
Compliance with applicable laws in Mainland China: Investors must comply with Shanghai Stock Exchange Rules and laws and regulations of Mainland China relating to the trading of A-shares under the Program. Where necessary, the HKEx has the power to take appropriate actions pursuant to Rules of the Exchange including not providing the necessary services and requiring the China Connect Exchange Participant to provide relevant information and materials to assist in investigation and to issue warning statements (verbally or in writing) to investors.
Should there be any discrepancy between the English and Chinese versions of this document, the English version shall prevail.
(Effective Date: November 2014)
Schedule 1 –
Notes related to Foreign Account Tax Compliance Act (“FATCA”)
Please read the “Client
Agreement” together with this Schedule 1 - Foreign Account
Tax Compliance Act. It forms parts of the “Client Agreement”.
Under Foreign Account
Tax Compliance Act (“FATCA”) enacted by the United States (“U.S.”) and became
effective on 18 March 2010 and the Inter-governmental Agreement (“IGA”) entered
into between United States and Hong Kong on 13 November 2014, financial
institutions in Hong Kong are required to collect certain information and
documentation from Client, identify accounts held by U.S. persons and report
relevant account information to the U.S. Internal Revenue Service (“IRS”). If Client
fail to provide the requested information or documentation, their U.S. source
income may be subject to withholding as required by FATCA.
For compliance of the regulatory
requirements in relation to FATCA and other related regulations, this Schedule
sets out the relevant rights and obligations between Client and OPSL.
In this part, the following terms
shall bear the following meanings:
The Foreign Account Tax
Compliance Act and includes:
sections 1471 through 1474 of the U.S. Internal Revenue
Code of 1986 (as amended) or any amended or successor version thereof;
any intergovernmental agreement, memorandum of
understanding, undertaking and other arrangement between governments and regulators
in connection with (i) including any agreement entered into by the government
of Hong Kong; and
agreements between OPSL
and the IRS or other regulator or government agency pursuant to or in
connection with (i); and
any laws, rules,
regulations, interpretations or practices adopted in the U.S., Hong Kong or
elsewhere pursuant to any of the foregoing.
“Foreign Law Requirement” means:
Any obligation imposed on OPSL pursuant
to any future or present:
foreign laws, rules and/or guidelines (including any
foreign laws, rules and/or guidelines in respect of which OPSL in its/ their
absolute discretion considers itself to be bound by);
Hong Kong laws that implement Hong Kong’s obligations
under an agreement with a foreign government (including the government of the
PRC) or regulator; and
foreign laws that OPSL
is subject to as a result of the agreement with the Hong Kong government.
For the avoidance of doubt, this
definition shall include any obligation or requirement that OPSL is subject to
pursuant to FATCA.
“Hong Kong” means the Hong Kong
Special Administrative Region of the PRC.
“IRS” means the U.S. Internal Revenue Service.
“PRC” means the People’s Republic of China (excluding Hong Kong, Macau, and
“Relevant Information” means any information, document or certification given
by or relating to Client, any Ultimate Owner, any account with us or any
transaction and shall include where the context permits identity information
and personal data.
“Ultimate Owner” means any ultimate beneficial owner of any account with OPSL,
the person ultimately responsible for giving of instructions of any
transaction, any person who act on Client’s behalf in receiving payment or any
other person identified by OPSL in its sole and absolute discretion as being
connected with Client.
“U.S.” means the United States of America.
UNDERTAKING TO PROVIDE
Client undertakes to
provide OPSL with information, documents and certifications as reasonably
required by OPSL in order to meet OPSL’s obligations under any Foreign Law
Requirement (including but not limited to FATCA). Client acknowledges and
agrees that this may include information, documents or certifications in
connection with Client, its authorized representatives, the person who receive
payments/ stocks from the Account, the Ultimate Owner, or any other person
identified by OPSL in its sole and absolute discretion to be connected with the
Client in any respect.
warrant and confirm that the Information from time to time provided to OPSL
under section 2.1 will always be true, complete and accurate without misleading
in all material aspects.
Client will, promptly
and from time to time, supply OPSL with identity information and personal data
in connection with the establishment or continuation of any Account with OPSL
or provision of services. Client further acknowledges that failure to supply
Relevant Information may result in OPSL being unable to effect a transaction,
provide the services under this Agreement or operate or maintain any Account
with OPSL; or may result in OPSL terminating the Account. It may also result in
OPSL having to withhold or deduct amounts as required under any Foreign Law
Requirement (including but not limited to FATCA).
Client will notify
OPSL forthwith of any change to the Relevant Information. OPSL will be entitled
to rely fully on all such Relevant Information for all purposes until OPSL is
notified to the contrary in writing and any such written notification will be
duly signed by Client.
Client must promptly
notify OPSL in writing of any change in any Relevant Information not later than
Disclosure of Client’s
Client agrees that OPSL
may disclose Relevant Information to any person or Government Authority,
whether or not established under Hong Kong law, as required under any Foreign
Law Requirement (including but not limited to FATCA) as determined by OPSL.
OPSL shall not be liable to the Client for the use of such information by the
and agrees that the information mentioned in Clause 3.1 above shall include,
,but not limited to, account number of Client’s Account(s), amount of interest
or dividends paid or credited to Client’s Account(s), the account balance or
value, the name, address country of residence and social security number or
employer identification number or taxpayer identification number (when
appropriate) of the Client, and such other information as may be required by
the IRS or other relevant authorities in compliance with Foreign Law
Without limiting any
other indemnity provided by Client, Client will indemnify OPSL and any of its
officers, employees and agents on demand against all losses, costs, damages,
claims, liabilities, expenses or demands (including but not limited to any
taxes, interest or penalties imposed pursuant to FATCA) that OPSL and any of
its officers, employees and agents may suffer as a result of the Client’s
failure to comply with its obligations under the Client Agreement, including
this Schedule 1.
and agrees that OPSL will be entitled to withhold, retain or deduct such
portion of monies from Client’s Account (or any accounts that the Client
maintains with the OPSL) as OPSL will at its sole and absolute discretion deem
sufficient to cover any amount which may be owed by Client under Clause 4.1
Client agrees that the
indemnities given herein shall continue to be valid and effective
notwithstanding the termination of the Account.
CONSENT TO DEDUCT,
WITHHOLD AND BLOCK
and agrees that notwithstanding any other provisions of the Client Agreement:
any payments by OPSL
under the Client Agreement will be subject to taxes, levies, imposts, duties or
other charges, withholding and deduction of a similar nature, at present or in
the future, as required under any Foreign Law Requirement (including but not
limited to FATCA), including but not limited to value added taxes, stamp
duties, fines, penalties or interest payable in connection with any failure to
pay or any delay in paying any of the above;
any amount withheld
under 5.1.1 may be held in whatever account or in whatever manner determined by
OPSL is not liable for
any gross up, loss or damage suffered as a result of the exercising of our
rights under this Clause 5.1.
Client acknowledges and agrees that any transaction,
payment or instruction under the Client Agreement may be delayed, blocked, transferred or terminated as
required for OPSL to meet OPSL’s obligations including those under any Foreign
Law Requirement as determined by OPSL.
acknowledges that OPSL will have the right to close Client’s account under the
Client Agreement, includes a right to immediately close the account if Client
fail to comply with any requirement of this Schedule in respect of a Foreign
Law Requirement, including failing to provide information, documents and
supporting materials as required by OPSL or closure is otherwise necessary or
convenient for compliance with a Foreign Law Requirement.
Remarks: Should there be any discrepancy between the English and
Chinese versions of this document, the English version shall prevail.