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RISK DISCLOSURE/ TERMS AND CONDITIONS FOR CONTRACT FOR DIFFERENCE (“CFD”) TRADING

The following Terms and Conditions (hereinafter called “the Terms and Conditions”) shall govern the trading relationship between Lim & Tan Securities Pte Ltd (hereinafter called “LTS”) and its Client (hereinafter called the “Client”) in relation to the Client’s request for and the Client’s use of the Contract For Differences (hereinafter called “CFD”) trading facility under the Client’s CFD Trading Account opened with LTS (hereinafter called “the Client’s Account”).  The Client agrees to be bound by the Terms and Conditions in addition to Terms and Conditions governing LTS’s Securities Trading Accounts, currently in effect and as amended from time to time which latter Terms and Conditions shall apply mutatis mutandis.  In the event of inconsistency, the Terms and Conditions for CFD trading shall prevail.

1. Purpose And Definitions
In this document and in any other agreements entered into between LTS and the Client, unless the context requires otherwise,
the terms

“CFD” means trading on the outcome of the price of a financial instrument (e.g. equities) and all CFD trades are open-ended margined products that require funding or financing on a daily basis.
 
“Singapore Dollars” and “S$” mean the lawful currency of the Republic of Singapore and, in respect of all payments to be made under the Terms and Conditions, mean immediately available and freely transferable funds.

“Default” means the occurrence of the following events :

1. The Client is in breach of any of the terms in the Terms and Conditions or fails to comply with any of its obligations hereunder or under the account or CFD contract;
2. The Client makes any voluntary arrangement with its creditors or becomes subject to an administration order or is the subject of a petition presented, an order made, or a resolution passed, to wind up the Client, to place the Client in bankruptcy or in judicial management, or to take any similar or analogous action in respect of the Client;
3. LTS is of the opinion that the financial condition of the Client or of any person guaranteeing the Client’s Account has materially or adversely changed since the date of the agreement or the date on which the account was opened, whichever is earlier;
4. LTS has, for more than 2 consecutive business days, been unable to establish direct contact with the Client or any of its designated representatives; or
5. LTS forms the view, in good faith, that it should take action in order to preserve its rights or interests under the account or under its relationship with the Client.

2. Risk Disclosure Statement
The Client understands, acknowledges and accepts that the risk of loss in trading of CFD can be substantial.  This risk disclosure statement does not purport to disclose or discuss all of the risks and other significant aspects of trading in CFD.  In light of the risks, the Client should undertake such transactions only if the Client understands the nature of the contracts (and contractual relationships) into which the Client is entering and the full extent of the Client’s exposure to the risk of loss.  It is important that the Client should carefully consider whether such trading is appropriate for the Client in the light of the Client’s experience, objectives, financial resources and other relevant circumstances, and the Client should be aware that this is solely the Client’s responsibility.  The Client understands that the Client should therefore consult the Client’s own legal, tax and financial advisers before entering into any particular transactions.  The Client further agrees that the Client shall accordingly be solely responsible for any transaction which the Client ultimately chooses to enter into.

In considering whether to trade in CFD, the Client should be aware of the following :-

2.1   Contractual Terms
The Client has the responsibility to fully understand the terms and conditions of the transactions and the Client’s rights and obligations under any agreement, contract or confirmation that the Client may enter into with LTS.

2.2    Commission, Interest And Other Charges
Before the Client begins to trade, the Client should obtain a clear explanation of all commissions, interests, fees and other charges for which the Client will be liable.  These charges will affect the Client’s net profit (if any) or increase the Client’s loss. The Client is liable for all of these at the rates determined by LTS as may be amended from time to time.

2.3    Leveraged Transactions
The high degree of leverage that is often obtainable in margin trading can work against the Client as well as for the Client due to fluctuating market conditions.  The Client may sustain large losses as well as gains in response to a small market movement.  While the amount of the initial margin required to enter into a transaction may be small relative to the value of the transaction, a relatively small market movement would have a proportionately larger impact.  Hence, in the event of unfavourable movements, the risk of loss can be significant.  The Client may sustain losses in excess of the Client’s cash and any other assets deposited as collateral with LTS. The Client will be liable without limit for all losses, including but not limited to interest charges.

2.4   Inadequacy of security margin or collateral
The Client may be called upon at short notice to make additional margin deposits or interest payments of substantial amounts.  The Client should be aware that the Client might not be given an extension of time when a margin call is made.  If the required margin deposits or interest payments are not made within the prescribed time, the Client’s collateral might be liquidated without his consent.  Moreover the Client will remain liable for any resulting deficit in the Client’s Account and interest charged on to the Client.  The Client should be aware that LTS might liquidate the Client’s collateral without contacting the Client.  Further, LTS may be entitled to decide which collateral to liquidate in order to best protect LTS’s interests.

If the Client does not provide the required additional funds or fail to make interest payments within the prescribed time or if the market moves against the Client further before the receipt by LTS of the additional funds, notwithstanding that the prescribed time has not elapsed, LTS at its sole discretion may (but is not obligated to) close all or any of the Client’s positions that the Client may have and liquidate the Client’s collateral in any event without the Client’s consent or prior notice.

If the amount is still not adequate to meet the Client’s obligations to LTS, the Client should be aware that the Client would be liable to LTS for the difference. Thus the Client should not commit to any transaction that is beyond the Client’s means and should carefully consider whether such trading or financing arrangement is suitable in light of the Client’s financial position and investment objectives.

2.5    Suspension or Restriction on Trading
Market conditions and the rules and regulations, which govern the relevant markets are beyond the control of LTS.  These market conditions and/or rules may give rise to events and/or circumstances (including but not limited to illiquidity, or suspension or restriction on trading) which may make it difficult or impossible to effect transactions and/or liquidate or offset positions and/or take any steps which the Customer may otherwise wish to take.

2.6    Transactions in Other Jurisdictions
Transactions in markets of other jurisdictions whether or not linked to the Singapore market may expose the Client to additional risk.  These markets in other jurisdictions may be subject to rules and regulations which have different or diminished investor protection.  LTS undertakes no responsibility and/or liability as to the Client’s awareness and/or understanding or otherwise of these rules and regulations.  The Client is assumed to be aware and to understand these rules and regulations of the foreign jurisdictions.  Notwithstanding existence of these rules and regulations, neither LTS nor the Singapore regulatory authorities can compel the enforcement and/or adherence to the same.

2.7   Currency Risk
The profit or loss arising from transactions in markets of other jurisdictions and/or foreign currency denominated securities will be affected by fluctuations in foreign exchange rates.
      
2.8   Trading Facilities and Electronic Trading
LTS’s trading facilities are supported by computer-based systems which deal with all aspects including but not limited to order-routing, execution, matching, registration and clearing of trades.  There are inevitable risks in such systems including but not limited to the failure of hardware and/or software which could result in the Client’s instructions not being executed accurately or at all.  The Client should also be aware that the Internet may not always be a reliable transmission medium and hence there may be unexpected delays or stoppages in service provisions.

2.9    CFD-OTC Transactions
In providing a liquid market and prices for CFD transactions, LTS hereby notifies and the Client hereby consents that LTS may act as market-maker for the Client’s CFD transactions.  Unless otherwise specified or agreed, LTS shall act as principal to the Client for CFD transactions.

3. Change of Particulars
The Client assures and undertakes to LTS that the Client will forthwith notify LTS in writing of:-

(a)  any change in the particulars given on the application form executed by the Client for the purpose of opening the Client’s Account.  Until  notification of such change is received by LTS in sufficient time as shall enable LTS to effectively act upon such notification, the Client shall absolve LTS of any responsibility or liability resulting from LTS’s acting on the basis of the original particulars;

(b) any material  change in personal situation, financial circumstances and/or investment profile.

4. CFD Trading Facility
The Client agrees that for the purpose of trading CFDs, the Client’s Account is a separate CFD Trading Account established by LTS for the Client.  A Credit Limit will be set by LTS and varied from time to time according to the Client’s credit status and the amount of funds deposited with LTS.  The Client agrees that LTS may, in its absolute discretion, apply a limit to :

1. the size of any order or trade or series of orders or trades which the Client may enter into;
2. the amount of any loss or liability to which the Client may be exposed.

The Client agrees that the Client will not be entitled to delivery of, or be required to deliver, the underlying Securities nor ownership thereof or any other interest therein.  The Client understands, acknowledges and accepts that a CFD has a fixed tenure and needs to be closed out at or before its expiry date and LTS reserves the right to an automatic roll-over and adjust the percentage of funding required or the rates at which interest is calculated on such CFD contracts especially in, but not limited to, volatile market conditions.

5. Placing Of Orders
The Client may instruct LTS to execute any CFD contract by placing an order, instruction or communication (by whatever means transmitted and whether or not in writing) which purports to have been given and which is reasonably accepted by LTS in good faith as having been given by the Client or on the Client’s behalf, without further enquiry on the part of LTS as to the accuracy, completeness or genuineness of such instructions or the authority or identity of the person giving or purporting to give such instructions and regardless of the circumstances prevailing at the time.  Once an order is received by LTS, such order is binding on the Client provided that the Client may give an order to withdraw, cancel, revoke or vary a previous order.

Where the Client gives LTS an order to withdraw, cancel, revoke or vary a previous order, LTS shall not be obliged to execute such order until after the Client confirms with LTS both that the previous order has not been executed, and that the withdrawal, cancellation, revocation or variation as the case may be, will not prejudice LTS’s position.

Nothing in the Terms and Conditions and/or any other contract and/or arrangement obliges LTS to enter into any CFD contract with or to act on any of the Client’s order, and LTS may refuse to enter into any contract or otherwise act on any order without giving any reason.  LTS shall bear no liability whatsoever for failing to comply with any of the Client’s order or for exercising or failing to exercise any discretion, power or authority conferred upon LTS by the Terms and Conditions.

In the event that LTS decides to act on any order or is otherwise under an obligation to act on any order, the Client agrees that LTS shall be allowed such amount of time to act and implement the order as may be reasonable, having regard to the systems and operations of LTS and the other circumstances then prevailing, and shall not be liable for any loss arising from any delay on the part of LTS in acting on the order.

6. Pricing
The Client understands that LTS will quote prices at which it is prepared to deal in CFDs with the Client.  The Client acknowledges that it is possible that errors may occur in the prices of contracts quoted by LTS which may be due to errors in the prices of the underlying Securities.  In such circumstances, without prejudice to any rights LTS may have under statute or common law, neither party will be bound by any contract which purports to have been made (whether or not confirmed by LTS) at a price which was, or ought reasonably to have been known to either party to be materially incorrect at the time of the contract.  The party asserting that the contract is voided under this clause shall give notice to the other within seven (7) calendar days of the contract.  If the Client gives notice to LTS under this clause, LTS shall determine, acting reasonably, whether the price quoted is materially incorrect.  Except in the case of fraud, LTS does not accept any liability for any loss or damage suffered by the Client as a result of the Client’s reliance on a price which the Client knew, or ought reasonably to have known, to be materially incorrect.

7. Margin Requirements
The Client agrees to deposit and maintain in the Client’s Account and/or otherwise provide LTS with initial margin in such amounts and at such times as LTS may in its sole and absolute discretion stipulate.  LTS may, in its sole and absolute discretion, with or without notice to the Client, vary the margin requirements at any time and by any level, and may also stipulate that such margin requirements shall apply to existing positions as well as to new positions affected by such change.

The Client acknowledges that LTS may, in certain market conditions, effect an immediate change in limits or levels and/or require additional margin to be deposited immediately or within a specified period of time, which period may, in certain circumstances, be less than 24 hours, and waives any right to object on the grounds that such requirement is or was unreasonable.  No previous margin levels shall set a precedent or bind LTS.  LTS reserves the right to close out any or all the Client’s open CFD positions upon a failure on the Client’s part to immediately deposit the required additional margin.

The Client agrees that if LTS determines that additional margin is required, a margin call will be made by LTS and the Client shall deposit with LTS such additional margin within the time stipulated or close out sufficient open positions to meet the margin call, provided that, notwithstanding any such demand for additional margin, LTS may at any time exercise its rights set out in Clause 14 below.  Margin calls may be made at any time by any method of communication including telephone, voice mail, letter, facsimile or electronic mail.

The Client acknowledges that the margin may be held and used to secure the performance of the Client’s obligations as well as for such other purposes as the applicable laws may permit or stipulate for the contracts traded.  All margin shall be held by LTS, notwithstanding any provision or instructions to the contrary, as continuing security and shall be subject to a general lien and right of setoff in favour of LTS for any and all of the Client’s liabilities to LTS, whether contingent or actual, under this agreement or otherwise, and LTS may realise any of the Client’s margin as provided for in the Terms and Conditions.

The Client agrees and understands that all margin shall be in such form as LTS may stipulate and the value of such margin shall be determined by LTS in its sole and absolute discretion. LTS shall be entitled to deposit, pledge, repledge or loan any margin in whatever form provided to LTS and shall not be under any obligation to account to the Client for any interest, income or benefit that may be derived there from. No interest shall be paid on any type of margin deposited by the Client with LTS. The Client acknowledges and consents that any interest earned on the margin deposited under the Term and Conditions may be retained by LTS for its own account and benefit.

The Client agrees and understands that the Client is responsible for monitoring the amount of margin deposited with LTS from time to time against the amount of margin currently required and any additional margin that may be necessary for the purpose of complying with obligations under this clause 7.

8. Withdrawal of Margin
The Client agrees that as long as the Client owes moneys or obligations (of whatsoever nature and howsoever arising) to LTS, the Client shall only withdraw margin from LTS with LTS’s consent.  LTS may at any time withhold any of the Client’s margin pending full settlement of all such moneys or the Client’s obligations.

9. Multiple Deals
The Client acknowledges that the Client shall not hold opposing CFD positions on the same Securities, for example, if the Client originally placed a sell order and subsequently placed a buy order for a CFD on the same Securities, this will close all or part of the Client’s original sell trade and may create a new open position.  If the Client has more than one open CFD position on the same Securities, such trades (or part thereof) will be closed in the order “First In, First Out” (commonly known as “FIFO”).

10. Adjustments and Corporate Actions
The Client acknowledges and agrees that if the underlying Securities of the CFD on which the Client is trading becomes subject to possible adjustments and/or corporate actions including but not limited to:

1. a subdivision, consolidation or reclassification of shares, or a free distribution of shares to existing holders by way of bonus, capitalization or similar issue;
2. a distribution to existing holders of the underlying Securities of additional shares, other share capital or securities granting the right to payment of dividends and/or proceeds of liquidation of the issuer equal proportionately with such payments to holders of the underlying Securities granting the right to a distribution of shares or to purchase, subscribe, or receive shares;
3. any event in respect of the shares analogous to any of the foregoing events or otherwise having a dilutive or concentrative effect on the market value of the shares;

LTS may determine the appropriate adjustment, if any, to be made to the contract value of that CFD and/or the related contract quantity to account for the dilutive or concentrative effect necessary to preserve the economic equivalent prior to that event, to be effective as of the date determined by LTS and such determination shall be conclusive and binding on the Client.  Notwithstanding the foregoing, LTS reserves the right to close all open positions relating to the underlying Security before the occurrence of the abovementioned adjustments and/or corporate actions (including but not limited to the event where dividends may be payable in a currency other than Singapore Dollars.)

11. Account Adjustment For Dividends
Without prejudice to the generality of Clause 10 above, the Client understands and agrees that an adjustment to the Client’s Account shall be made with reference to any dividend attributable to the underlying Security of any CFD and shall be made and calculated as follows :

(a) where the Client holds a long position, LTS shall adjust the Client’s Account in favour of the Client by the net dividend per share multiplied by the contract quantity; and

(b) where the Client holds a short position, LTS shall adjust the account in favour of LTS by the gross dividend per share multiplied by the contract quantity.

12. Market Disruption
The Client understands that LTS may in its absolute discretion with or without any notice to the Client (and without prejudice to any other rights or remedies it may otherwise have under the Terms and Conditions or at law) :

(i) close any or all open positions, refuse any trades, cancel any orders and fill any orders in each case at such level as LTS may consider;

(ii) suspend or modify the application of any terms of the Terms and Conditions to the extent that it is impossible or not reasonably practicable to comply with them;

(iii) take all such other actions as LTS deems appropriate in the circumstances; and

in the absence of fraud or bad faith, LTS shall not be liable to the Client for any loss, cost, claim, damage, demand or expense of whatever nature the Client may suffer or incur in connection with and howsoever arising including but not limited to any of the following circumstances or events :

(a) if the underlying Security on which the Client is trading is the subject of a take-over offer or merger offer or the issuer of such Security has entered into or is the subject of insolvency or liquidation proceedings;

(b) any event which disrupts the market, including the suspension of or limitation of trading by reason of movements in price exceeding limits permitted by the relevant exchange or otherwise howsoever and which is, in the sole determination of LTS, material.

The Client acknowledges that in the event of a suspension of trading in the underlying security, LTS shall have the right, at its discretion, to:

(a) require open CFD long (“buy”) positions to be settled in full from the date of suspension or such date(s) which LTS shall determine;  and/or

(b) require the mandatory 20% maintenance margin on open CFD short (“sell”) positions based on the underlying security’s last done market price prior to suspension (or on such date(s) which LTS shall determine);  and/or

(c) close or terminate the CFD contract if the underlying security is suspended for an unduly long period of time and cash-settle the contract at such price(s) which LTS shall determine (and there will be no share delivery for the settlement of such CFD contracts);  and/or

(d) suspend or close the Client’s account as if upon the occurrence of an event of Default.

The Client agrees that in the event of a delisting of the underlying security, LTS shall have the right, at its discretion, to close or terminate the CFD contract and cash-settle the contract at such price(s) which LTS shall determine.  There will be no share delivery for the settlement of such CFD contracts.

13. Termination of Open CFD Positions
The Client acknowledges that LTS may in its sole discretion close or terminate any open CFD position without notice to the Client upon a failure on the Client’s part to honour a margin call.  If LTS does not close or terminate any such open CFD position but the Client remains in breach of applicable margin limits, LTS may at any time close or terminate any open CFD position and decline to enter into any further positions unless a further deposit of funds is received to bring the Client’s Account within Account limits.

14. LTS’s Rights
The Client agrees that without prejudice to any other right of LTS hereunder or otherwise at law, in the event of Default, LTS may (but is not obliged) immediately or at any time thereafter, do any one or more of the following :

(a) suspend (indefinitely or otherwise) or close the Client’s Account, or LTS’s relationship with the Client and accelerate any and all of the Client’s liabilities to LTS so that they shall become immediately due and payable;

(b) hedge and/or close out all or any of the Client’s open positions;

(c) cancel any of the Client’s outstanding orders;

(d) apply any amounts of whatsoever nature standing to the Client’s credit against any amounts which the Client owes to LTS (of whatever nature and howsoever arising, including any contingent amounts), or generally to exercise LTS’s right of setoff against the Client;

(e) demand any shortfall from the Client, hold any excess pending full settlement of any other obligations of the Client, or pay any excess to the Client;  and/or

(f) exercise such other authority and powers that may have been agreed with and/or conferred upon LTS.

In relation to LTS’s right to close-out all or any of the Client’s open CFD positions, the Client accepts that LTS may close out which of the Client’s positions and in what proportion that LTS decides in its absolute discretion.

15. Interest, Commissions and Charges
The Client acknowledges and agrees that the Client shall promptly pay all interest, commissions and charges at such rates and in such manner as LTS may in its sole and absolute discretion impose and stipulate from time to time with respect to the execution, performance and/or settlement of any contract or otherwise for the maintenance of the Client’s Account.  The Client shall further agree to make payment to LTS’s order promptly of any outstanding sum on the due date of the relevant contract, or upon demand by LTS as provided for in the Terms and Conditions.  The Client understands and acknowledges that LTS shall be entitled to charge interest on any sum or payment due to LTS from the Client at such rate and calculated and/or compounded in such manner as LTS may, in its sole and absolute discretion, impose and determine from time to time and to debit the Client’s Account in respect of the interest due. Without prejudice to the generality of the foregoing, the Client agrees to pay interest on all monies due and payable by the Client to LTS, before as well as after judgment and whether or not prior notification thereof has been given to the Client, at the rate of 3% above the prevailing United Overseas Bank Limited’s prime lending rate from time to time and in the case of foreign currency denominated accounts at such rate as may be determined by LTS in its sole discretion.  Interest shall be calculated on a daily basis on a 360-day year on all outstanding sums from the due date to the date of full payment.  The Client further agrees that the applicable interest rate may be varied by LTS from time to time in its absolute discretion.

16. Notices, CFD Advices, CFD Statements and Communication
The Client agrees that all notices, CFD advices, CFD month-end statements and communications to the Client may be sent by prepaid post, hand delivery or such other manner as LTS may in its discretion deem fit, to the address and/or the Client’s electronic mail address as stated in the Application Form For Opening A Contract For Difference (CFD) or the Client’s last known address or such other address as may be notified in writing by the Client to LTS.

The Client acknowledges that all notices, CFD advices, CFD statements and communications sent by LTS shall be conclusively deemed to have been received by the Client on the next business day after posting if sent by prepaid post, notwithstanding that the same be returned unclaimed; on the day of delivery if delivered by hand; and on the day of dispatch if sent by telex, facsimile or electronic mail.

17. Indemnity
The Client shall indemnify and hold harmless LTS, its employees and agents against all losses, damages, liabilities, claims, expenses, duties, fines, penalties, charges of any nature including legal costs (on a full indemnity basis) which LTS, its employees or agents may suffer or incur whether directly or indirectly as a result of or in connection with any transaction or instruction that may be carried out by LTS on behalf of the Client or the Client’s use of or access to the Online Trading System or any breach of contract or any demands made or actions or proceedings taken in relation to any terms agreed between LTS and the Client.

18. Invalidity of any provision
If any of the provisions of the Terms and Conditions or any part thereof shall be adjudged invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions or any part thereof shall not in any way be affected.

19. Contracts (Rights of Third Parties) Act, Chapter 53B
A person who is not a party to the Terms and Conditions has no right under the Contracts (Rights of Third Parties) Act, Chapter 53B to enforce any term of the Terms and Conditions but this does not affect any right or remedy of a third party which exists or is available from the aforesaid Act.

20. Governing Law and Jurisdiction
The Client understands that the Terms and Conditions are governed by and shall be construed in accordance with the laws of Singapore. The Client acknowledges that the Client hereby irrevocably submits to the non-exclusive jurisdiction of the Courts of Singapore.

21. Service
LTS may serve any writ of summons, statement of claim or other legal process or document in respect of any action or proceedings required by any relevant law or the rules of court to be served on the Client by personal service, by leaving the same at, and/ or sending the same by ordinary post, to the last known address (whether within or outside Singapore and whether such address is a Post Office Box or is a place of residence or business) as may be provided to LTS or their solicitors.

Such legal process or document is deemed to have been duly served on the Client:-

(i) on the date of delivery, if sent by hand; and

(ii) on the date immediately following the date of posting, if sent by post.

Service of such legal process is deemed to be good and effective service of such legal process on the Client even if documents are returned undelivered and nothing in the Agreement between LTS and the Client shall affect the right to serve legal process in any other manner permitted by law.