A. Issuer Risk Factors
1. PSS as issuer or counterparty I
Where PSS is the issuer or counterparty of the relevant Financial Instruments, an investment in any such Financial
Instruments bears the risk that PSS is not able to fulfil its obligations under the relevant Financial Instruments on
any relevant due date.
In order to assess the risk, prospective investors should consider all information provided in the offering
documents relating to the relevant Financial Instruments and consult with their own professional advisers if they
consider it necessary.
The risk related to PSS's ability to fulfil its obligations in respect of any such Financial Instruments is described by
reference to the credit ratings assigned by independent rating agencies. A rating is not a recommendation to buy,
sell or hold Financial Instruments and may be subject to suspension, reduction or withdrawal at any time by the
assigning rating agency. A suspension, reduction or withdrawal of any rating assigned may adversely affect the
market price of some Financial Instruments where PSS is the issuer.
Rating of Subordinated Obligations Any Financial Instruments which are subordinated obligations of PSS may be
rated lower than those set out above because, in the case of an insolvency or liquidation of PSS, the claims
resulting from these obligations are subordinated to those claims of creditors of PSS that are not also
The value of Financial Instruments where PSS is the issuer or the counterparty is expected to be affected, in part,
by investors' general appraisal of PSS's creditworthiness. Any reduction in the creditworthiness of PSS could result
in a reduction in the value of such Financial Instruments. If a bankruptcy proceeding is commenced in respect of
PSS, the return to a holder of, or a party to, such Financial Instrument may be limited and any recovery will likely
be substantially delayed.
2. Third Party as issuer or counterparty
Where a Third Party is the issuer or counterparty of the relevant Financial Instruments, an investment in any such
financial Instruments bears the risk that the relevant Third Party is not able to fulfil its obligations under the
relevant Financial Instruments on any due date.
In order to assess the risk, prospective investors should consider all information provided in the offering
documents relating to the relevant Financial Instruments and consult with their own advisers if they consider it
necessary. PSS accepts no obligation or liability whatsoever in relation to any Third Party and makes no
representation, warranty or other assurance as to the ability or otherwise of any Third Party to perform any of its
obligation in relation to any Financial Instrument issued by it.
If the obligations of the Third Party are subordinated then the same considerations as those described above
under "Rating of Subordinated Obligations" apply.
The value of Financial Instruments where a Third Party is the issuer or the counterparty is expected to be affected,
in part, by investors' general appraisal of the Third Party's creditworthiness. Any reduction in the creditworthiness
of the Third Party could result in a reduction in the value of such Financial Instruments. If a bankruptcy proceeding
is commenced in respect of the Third Party, the return to a holder of, or a party to, such Financial Instrument may
be limited and any recovery will likely be substantially delayed.
B. General Risk Factors Relating to Financial Instruments
1. No Payments or Deliveries until Settlement
Prospective investors should note that where no periodic interest payments or other distributions are to be made
during the term of a Financial Instrument, where such Financial Instruments are in the form of securities or are
otherwise tradeable, a realisation in the secondary market of such Financial Instruments may be the only return
potentially available to the investor prior to settlement of such Financial Instruments. However, investors should
note the risk factors described under the headings "Market value" and "Financial Instruments may be Illiquid" set
out under the heading "D. Market Factors" below in this regard.
2. Early Termination for Extraordinary Reasons, Illegality and Force Majeure
If so indicated in the terms and conditions of any Financial Instruments, if PSS or the relevant Third Party, as the
case may be, determines that, for reasons beyond its control, the performance of its obligations in relation to the
relevant Financial Instruments has become illegal or impractical in whole or in part for any reason, or PSS or the
relevant Third Party, as the case may be, determines that, for reasons beyond its control, it is no longer legal or
practical for it to maintain its hedging arrangements with respect to such Financial Instruments for any reason, PSS
or the relevant Third Party, as the case may be, may, at its discretion and without obligation, terminate early such
Financial Instruments. Prospective purchasers should review the terms and conditions of the relevant Financial
Instruments to ascertain whether and how such provisions apply to such Financial Instruments and what are the
consequences of such termination, including as to what if anything, is payable as a result thereof.
3. Market Disruption Events, Adjustments and Early Termination of Financial Instruments
If so indicated in the terms and conditions of any Financial Instruments, the relevant Calculation agent may
determine that a market disruption event has occurred or exists at a relevant time. Any such determination may
delay valuation in respect of the relevant Underlying which may have an effect on the value of the relevant
Financial Instruments and/or may delay settlement in respect of such Financial Instruments.
In addition, if so indicated in the terms and conditions of any Financial Instruments, the calculation agent may
make adjustments to such terms and conditions to account for relevant adjustments or events in relation to the
Underlying including, but not limited to, determining a successor to the relevant Underlying or its issuer or its
sponsor, as the case may be. In addition, in certain circumstances, PSS or the relevant Third Party, as the case may
be, may terminate early the relevant Financial Instruments following any such event.
Prospective purchasers should review the terms and conditions of the relevant Financial Instruments to ascertain
whether and how such provisions apply to such Financial Instruments and what constitutes a relevant adjustment
Potential purchasers and sellers of Financial Instruments should be aware that they may be required to pay stamp
taxes or other documentary charges in accordance with the laws and practices of the country where the relevant
Financial Instruments are transferred.
Payment and/or delivery of any amount due in respect of Financial Instruments may be conditional upon the
payment of certain taxes, duties and/or expenses as provided in the terms and conditions of the relevant Financial
Instruments. PSS or the relevant Third Party, as the case may be, has the right, but may not be obliged, to withhold
or deduct from any amount payable or deliverable under such Financial Instruments such amount or portion as
shall be necessary to account for or to pay any tax, duty, charge, withholding or other payment.
Prospective investors should review the terms and conditions of the relevant Financial Instruments to ascertain
whether and how such provisions apply to such Financial Instruments.
Potential purchasers who are in any doubt as to their tax position should consult their own independent tax
advisers. In addition, potential purchasers should be aware that tax regulations and their application by the
relevant taxation authorities change from time to time. Accordingly, it is not possible to predict the precise tax
treatment which will apply at any given time.
5. Exercise Notice and Certifications
If any Financial Instruments are subject to provisions concerning delivery of an exercise notice and such notice is
received by the party or parties specified after the latest time specified in the terms and conditions of the relevant
Financial Instruments, it may not be deemed to be duly delivered until some later day. Such deemed delay may in
the case of cash settled Financial Instruments increase or decrease the cash amount payable at settlement from
what it would otherwise have been but for such deemed delay.
In the case of Financial Instruments which are exercisable on one day only or only during an exercise period and
are not expressed to be automatically exercised, any exercise notice, if not delivered by the latest time specified in
the terms and conditions of the relevant Financial Instruments, shall be void.
The failure to deliver any certifications required by the terms and conditions of an issue of Financial Instruments
could result in the loss or inability to receive amounts or deliveries otherwise due under such Financial
Instruments. Prospective purchasers should review the terms and conditions of the relevant Financial Instruments
to ascertain whether and how such provisions apply to such Financial Instruments.
Financial Instruments not exercised in accordance with their terms and conditions will expire worthless.
Prospective purchasers should review the terms and conditions of the relevant Financial Instruments to
ascertain whether such Financial Instruments are subject to automatic exercise, and when and how an exercise
notice may be validly delivered.
6. Time Lag After Exercise
Where Financial Instruments are to be exercised and settled by a cash payment, then, upon their exercise, there
may be a time lag between the time exercise occurs and the time the applicable cash amount relating to such
exercise is determined. Any such delay between the time of exercise and the determination of the cash amount
will be specified in the terms and conditions of the relevant Financial Instruments. However, such delay could be
significantly longer, particularly in the case of a delay in exercise of such cash settled Financial Instruments arising
from any daily maximum exercise limitations or upon the determination by the calculation agent that a market
disruption has occurred at any relevant time. The applicable cash amount could decrease or increase from what it
would have been but for such delay.
Prospective purchasers should review the terms and conditions of the relevant Financial Instruments to ascertain
whether and how such provisions apply to such Financial Instruments.
7. Highly Volatile Markets
Financial Instruments may be linked to the prices of commodities contracts and derivative instruments, including
futures and options which are highly volatile. Price movements of forward contracts, futures contracts, and other
derivative contracts to which a Financial Instrument may be linked are influenced by, among other things, interest
rates, changing supply and demand relationships, trade, fiscal, monetary and exchange control programmes and
policies of governments, and national and international political and economic events and policies. In addition,
governments from time to time intervene, directly or indirectly and by regulation in certain markets, particularly
those in currencies and interest rate related futures and options. Such intervention often is intended directly to
influence prices and may, together with other factors, cause all of such markets to move rapidly in the same
direction because of, among other things, interest rate fluctuations. Any such intervention may have an adverse
effect on the value of certain Financial Instruments.
Before an investor purchases any Financial Instrument, it should obtain details of all commissions and other
charges for which you will be liable. If any charges are not expressed in money terms (but, for example, as
percentage of contract value), it should obtain a clear and written explanation, including appropriate examples, to
establish what such charges are likely to mean in specific money terms. In the case of futures, when commission is
charged as a percentage, it will normally be as a percentage of the total contract value, and not simply as a
percentage of any initial payment.
C. Product Specific Risk Factors
Product Specific Risk Factors
Different Financial Instruments involve different levels of exposure to risk and in deciding whether to trade in or
purchase any Financial Instruments, potential investors should take note of the following.
An investment in any Financial Instruments involves risks. These risks may include, among others, equity market,
bond market, foreign exchange, interest rate, market volatility and economic, political and regulatory risks and any
combination of these and other risks. Some of these risks are briefly discussed below.
Prospective purchasers should be experienced with respect to transactions in instruments such as the relevant
Financial Instruments and in the Underlying relating to such Financial Instruments. Prospective purchasers should
understand the risks associated with an investment in the relevant Financial Instruments and should only reach an
investment decision after careful consideration, with their legal, tax, accounting and other advisers, of (a) the
suitability of an investment in the relevant Financial Instruments in the light of their own particular financial, tax
and other circumstances, (b) the information set out in the offering document relating to the relevant Financial
Instruments and (c) the relevant Underlying.
Financial Instruments may decline in value and, where Financial Instruments are capital protected, investors
should note that, whatever their investment in such Financial Instruments, the cash amount due at maturity will
never be less than a specified minimum cash amount.
An investment in any Financial Instrument should only be made after assessing the direction, timing and
magnitude of potential future changes in the value of the relevant Underlying and/or in the composition and/or
the method of calculation of the relevant Underlying, as the return of any such investment will be dependent, inter
alia, upon such changes. An investor in a Financial Instrument must generally be correct about the direction, timing
and magnitude of an anticipated change in the value of the relevant Underlying. More than one risk factor may
have simultaneous effect with regard to a Financial Instrument such that the effect of a particular risk factor may
not be predictable. In addition, more than one risk factor may have a compounding effect which may not be
predictable. No assurance can be given as to the effect that any combination of risk factors may have on the value
of a Financial Instrument.
Financial Instruments linked to an Underlying represent an investment linked to the economic performance of the
relevant Underlying and prospective investors should note that the return (if any) on their investment in such
Financial Instruments will depend upon the performance of such Underlying. Potential investors should also note
that whilst the market value of such Financial Instruments is linked to such Underlying and will be influenced
(positively or negatively) by such Underlying, any change may not be comparable and may be disproportionate. It
is impossible to predict how the level of the relevant Underlying will vary over time. In contrast to a direct
investment in the relevant Underlying, such Financial Instruments represent the right to receive payment or
delivery, as the case may be, of the relevant amount(s) on the specified or determinable date(s) in respect of such
Financial Instruments which may include periodic payments of interest (if specified in the terms and conditions for
such Financial Instruments), all or some of which may be determined by reference to the performance of the
relevant Underlying. The applicable terms and conditions will set out the provisions for the determination of the
amount(s) payable or deliverable, as the case may be, on the specified or determinable date(s) in respect of the
relevant Financial Instruments including any periodic interest payments.
PROSPECTIVE INVESTORS IN FINANCIAL INSTRUMENTS LINKED TO AN UNDERLYING MUST REVIEW THE TERMS
AND CONDITIONS OF THE RELEVANT FINANCIAL INSTRUMENTS TO ASCERTAIN WHAT THE RELEVANT UNDERLYING
IS AND TO SEE HOW BOTH ANY AMOUNTS PAYABLE OR DELIVERABLE, AS THE CASE MAY BE, ARE DETERMINED
AND WHEN ANY SUCH AMOUNT(S) ARE PAYABLE AND/OR DELIVERABLE, AS THE CASE MAY BE, BEFORE MAKING
ANY DECISION TO PURCHASE SUCH FINANCIAL INSTRUMENTS.
The only return on Financial Instruments may be the potential payment or delivery, as the case may be, of the
amounts payable on exercise or redemption or otherwise due and payment of any periodic interest payments and
prospective purchasers should review the terms and conditions of the relevant Financial Instruments to ascertain
what amount(s) is/are payable and/or deliverable, what circumstances and when.
PSS or the relevant Third Party, as the case may be, may issue several issues of Financial Instruments relating to
the same Underlying. However, no assurance can be given that PSS or the relevant Third Party, as the case may be,
will issue more than one issue of Financial Instruments linked to such Underlying. At any given time, the number of
Financial Instruments outstanding may be substantial.
Financial Instruments may be linked to, inter alia, equity securities, indices, currencies, the credit of specified
entities, derivatives, commodities and/or commodity futures, private equity or illiquid assets and real estate,
low credit quality securities, distressed securities, investments in emerging or developing markets and/or fund
shares including hedge funds.
Financial Instruments Linked to Equity Securities
In respect of Financial Instruments linked to an equity security or basket of equity securities, on the specified or
determinable date(s) in respect of such Financial Instruments, investors may receive either physical delivery of a
given number of the relevant equity securities and/or payment of an amount determined by reference to the value
of the relevant equity securities on a given date or dates as compared to another date or dates. Accordingly, an
investment in such Financial Instruments may bear similar market risks to a direct investment in the relevant
equity securities and investors should take advice accordingly. Interest (if any) payable on such Financial
Instruments may be calculated by reference to the value of one or more equity securities on a given date or dates
as compared to another date or dates or by reference to any dividends paid in respect of any such equity
In relation to such Financial Instruments, no issuer of the relevant equity securities will have participated in the
preparation of any offering document relating to the relevant Financial Instruments or the terms and conditions of
the relevant Financial Instruments and PSS will not make any investigation or enquiry with respect to the
information concerning any such issuer contained therein or in the documents from which such information was
extracted. Consequently, there can be no assurance that all events occurring prior to the issue date of the relevant
Financial Instruments (including events that would affect the accuracy or completeness of any publicly available
documents used by PSS in the preparation of any offering document relating to the relevant Financial Instruments)
that would affect the trading price of the relevant equity securities will have been publicly disclosed. Subsequent
disclosure of any such events or the disclosure of or failure to disclose material future events concerning the issuer
of such equity securities could affect the trading price of such equity securities and therefore the trading price or
value of such Financial Instruments.
Except as otherwise provided in the terms and conditions of such Financial Instruments, holders of such Financial
Instruments will not have voting rights or rights to receive dividends or distributions or any other rights with
respect to the relevant equity securities to which such Financial Instruments relate.
Financial Instruments linked to Indices
In respect of Financial Instruments linked to an index or basket of indices, on the specified or determinable date(s)
in respect of such Financial Instruments, investors may receive payment of an amount determined by reference to
the value of the relevant index or indices on a given date or dates as compared to another date or dates and/or
physical delivery of assets linked to the relevant index or indices. Interest (if any) payable on such Financial
Instruments may be calculated by reference to the value of one or more of the relevant indices on a given date or
dates as compared to another date or dates.
Financial Instruments linked to Currencies
In respect of Financial Instruments linked to one or more currencies, on the specified or determinable date(s) in
respect of such Financial Instruments, investors may receive payment of an amount determined by reference to
the value of the relevant currencies on a given date or dates as compared to another date or dates. Interest (if any)
payable on such Financial Instruments may be calculated by reference to the value of one or more of the relevant
currencies on a given date or dates as compared to another date or dates.
Fluctuations in exchange rates of the relevant currency (or one or more of the currencies in a basket of currencies)
will affect the value of Financial Instruments linked to such currency or currencies. Furthermore, investors who
intend to convert gains or losses from the receipt of monies from or sale of such Financial Instruments into their
home currency may be affected by fluctuations in exchange rates between their home currency and the relevant
currency (or one or more of the currencies in a basket of currencies). Currency values may be affected by complex
political and economic factors, including governmental action to fix or support the value of a currency (or one or
more of the currencies in a basket of currencies), regardless of other market forces. Purchasers of Financial
Instruments linked to a currency or currencies risk losing their entire investment if exchange rates of the relevant
currency (or one or more of the currencies in a basket of currencies) do not move in the anticipated direction.
If additional Financial Instruments or options relating to particular currencies or particular currency indices are
subsequently issued, the supply of Financial Instruments and options relating to such currencies or currency
indices, as applicable, in the market will increase, which could cause the price at which such Financial Instruments
are traded in the secondary market to decline significantly.
In the ordinary course of its day-to-day foreign exchange trading or market making or in order to manage the risk
of its exposure in relation to any Financial Instrument entered into with you, PSS and/or its affiliates or any third
party may enter into, unwind, terminate or close-out in whole or in part transactions with third parties (Third Party
Transactions) before, at or after the time at which: (i) the valuation of the Financial Instrument is determined; (ii)
the valuation of an external market fixing or benchmark to which a Financial Instrument makes reference is
determined (a Fixing); (iii) the Financial Instrument becomes due to settle; or (iv) a party's rights to require
settlement of the Financial Instrument become exercisable (all or any of these times being a Relevant Time). It is
possible that entry into Third Party Transactions at a Relevant Time may affect currency exchange rates directly or
indirectly, which, in turn, may have an impact on the value of a Financial Instrument to you, or the value of a Fixing
and/or may trigger certain provisions of a Financial Instrument.
Financial Instruments linked to the Credit of Specified Entities
Financial Instruments may be linked to the credit of one or more specified entities and in the event of the
occurrence of certain circumstances specified in the terms and conditions of such Financial Instruments , PSS's or,
as the case may be, the relevant Third Party's obligation to pay amounts under such Financial Instruments may be
replaced by an obligation to pay other amounts calculated by reference to the value of obligations relating to one
or more of such specified entities and/or to deliver any such obligations. In addition, such Financial Instruments
which are interest bearing may cease to bear interest on or prior to the date of occurrence of any such
Financial Instruments linked to Derivatives
Financial Instruments may be issued or otherwise entered into, the return on which is linked to derivative
instruments (which may be complex) which seek to modify or replicate the investment performance of particular
securities, commodities, currencies, interest rates, indices or markets on a leveraged or unleveraged basis. The
Underlying in respect of such Financial Instruments generally has counterparty risk and may not perform in the
manner expected, thereby resulting in greater loss or gain in value. Such Financial Instruments are subject to risks
that can result in a loss of all or part of the value of the Underlying and thus adversely affect the value of the
Financial Instruments. Such risks can include interest rate and credit risk, volatility, world and local market price
and demand, and general economic factors and activity. The Underlying may be a derivative which may also have
very high leverage embedded in it that can substantially magnify market movements, meaning that losses could in
some cases exceed the value of the relevant derivative instrument and thus result in a total loss.
Some of the markets for derivative instruments are "over-the-counter" or "interdealer" markets, which may be
illiquid and are sometimes subject to larger spreads between the bid and offer prices than exchange-traded
derivative instruments. The participants in such markets are typically not subject to credit evaluation and
regulatory oversight, which would be the case with members of "exchange-based" markets. This exposes investors
in Financial Instruments linked to any such derivatives to the risk that a counterparty will not settle a transaction in
accordance with its terms and conditions because the counterparty has a credit or liquidity problem or because
the counterparty defaults for some other reason. Delays in settlement may also result from disputes over the
terms of the relevant derivative contract (whether or not bona fide) since such markets may lack the established
rules and procedures for swift settlement of disputes among market participants found in "exchange-based"
markets. These factors may cause the value of a Financial Instrument to decrease. Such "counterparty risk" is
present in all "over-the-counter" or bilateral swaps, and is accentuated in contracts with longer maturities where
unforeseen events may intervene to prevent settlement. The valuation of over-the-counter derivative transactions
is also subject to greater uncertainty and variation than that of exchange-traded derivatives and valuations
provided by one party may differ from valuations provided by a third party or the value upon liquidation of the
relevant transaction. Under certain circumstances, it may not be possible to obtain market quotations for the value
of an over-the-counter derivatives transaction.
Financial Instruments linked to Commodities and/or Commodity Futures
In respect of Financial Instruments linked to a commodity or basket of commodities or commodity futures, on the
specified or determinable date(s) in respect of such Financial Instruments, investors may receive payment of an
amount determined by reference to the value of the relevant commodities or futures contracts on a given date or
dates as compared to another date or dates. Interest (if any) payable on such Financial Instruments may be
calculated by reference to the value of one or more commodities on a given date or dated as compared to another
date or dates or by reference to one or more commodity futures contracts.
Investors should note that the movements in the price of the commodity or basket of commodities may be subject
to significant fluctuations that may not correlate with changes in interest rates, currencies or other indices and the
timing of changes in the relevant price of the commodity or commodities may affect the actual yield to investors,
even if the average level is consistent with their expectations. In general, the earlier the change in the price or
prices of the commodities, the greater the effect on yield.
Commodity futures markets are highly volatile. Commodity markets are influenced by, among other things,
changing supply and demand relationships, weather, governmental, agricultural, commercial and trade
programmes and policies designed to influence commodity prices, world political and economic events, and
changes in interest rates. Moreover, investments in futures and options contracts involve additional risks including,
without limitation, leverage (margin is usually a percentage of the face value of the contract and exposure can be
nearly unlimited). A holder of a futures position may find such positions become illiquid because certain
commodity exchanges limit fluctuations in certain futures contract prices during a single day by regulations
referred to as "daily price fluctuation limits" or "daily limits". Under such daily limits, during a single trading day no
trades may be executed at prices beyond the daily limits. Once the price of a contract for a particular future has
increased or decreased by an amount equal to the daily limit, positions in the future can neither be taken nor
liquidated unless traders are willing to effect trades at or within the limit. This could prevent a holder from
promptly liquidating unfavourable positions and subject it to substantial losses.
Futures contract prices in various commodities occasionally have exceeded the daily limit for several consecutive
days with little or no trading. Similar occurrences could prevent the liquidation of unfavourable positions and
subject an investor in a Financial Instrument linked to such contract prices to substantial losses.
The market price of such Financial Instruments may be volatile and may depend on the time remaining to exercise
or redemption and the volatility of the price of the commodity or commodities. The price of the commodity or
commodities may be affected by economic, financial and political events in one or more jurisdictions, including
factors affecting the exchange(s) or quotation system(s) on which any such commodities may be traded.
Financial Instruments linked to private equity or illiquid assets
Financial Instruments may be linked to an Underlying which is subject to legal or other restrictions on transfer or
for which no liquid market exists, such as equity securities in private companies. The market prices, if any, of such
equity securities tend to be more volatile and it may be impossible to sell such equity securities when desired or to
realise their fair value in the event of a sale. Such equity securities may neither be listed on a stock exchange nor
traded in an over-the-counter market. As a result of the absence of a public trading market for these equity
securities, they are likely to be less liquid than publicly traded equity securities. There may be substantial delays in
attempting to sell non-publicly traded equity securities. Although these equity securities may be sold in privately
negotiated transactions, the prices realised from these sales could be less than those originally paid. Furthermore,
companies whose equity securities are not registered or publicly traded are not subject to the disclosure and other
investor protection requirements which would be applicable if their equity securities were registered or publicly
In addition, an exchange or regulatory authority may suspend trading in a particular contract, order immediate
liquidation and settlement of a particular contract, or order that trading in a particular contract be conducted for
liquidation only. The illiquidity of positions may result in significant unanticipated losses and thus investors in
Financial Instruments linked thereto may also suffer significant unanticipated losses.
Financial Instruments linked to low credit quality securities
Financial Instruments may be linked to particularly risky investments that also may offer the potential for
correspondingly high returns. As a result, there is a significant risk that an investor in such Financial Instrument
may lose all or substantially all of its investment. The Underlying relating to such Financial Instruments may be
rated lower than investment grade and hence may be considered to be "junk bonds" or distressed securities (see
also "Financial Instruments linked to distressed securities" below).
Financial Instruments linked to distressed securities
Financial Instruments may be linked to the securities of issuers in weak financial condition, experiencing poor
operating results, having substantial capital needs or negative net worth, facing special competitive or product
obsolescence problems, or that are involved in bankruptcy or reorganisation proceedings. Such Financial
Instruments may involve substantial risks that can result in substantial or even total losses of the amount invested
in such Financial Instruments. Among the risks inherent in Financial Instruments linked to such investments is that
it frequently may be difficult to obtain information as to the true condition of the issuer of the relevant Underlying;
the value of the relevant Underlying may be adversely affected by laws relating to, among other things, fraudulent
transfers and other voidable transfers or payments, lender liability and a court's power to disallow, reduce,
subordinate or disenfranchise particular claims; the market price of the relevant Underlying may be subject to
abrupt and erratic market movements and above-average price volatility, and the spread between the bid and
offer prices of the relevant Underlying may be greater than those prevailing in other securities markets; it may
take a number of years for the market price of the relevant Underlying to reflect its intrinsic value; in a corporate
reorganisation, it may not be possible to effect the reorganisation (due to, for example, failure to obtain requisite
approvals); and in a liquidation (both in and out of bankruptcy) and a reorganisation there exists the risk that the
liquidation or reorganisation will be delayed (for example, until various liabilities, actual or contingent, have been
satisfied) or will result in a distribution of cash or a new security the value of which will be less than the purchase
price of the relevant Underlying.
Financial Instruments linked to Investments in emerging or developing markets
Financial Instruments may be linked to securities of issuers that are not located in, or subject to regulation in,
developed countries or securities which are not denominated in the currency of, or are not traded in, developed
countries. Investment in such Financial Instruments involve certain special risks, including risks associated with
political and economic uncertainty, adverse governmental policies, restrictions on foreign investment and currency
convertibility, currency exchange rate fluctuations, possible lower levels of disclosure and regulation, and
uncertainties as to the status, interpretation and application of laws, including, but not limited to, those relating to
expropriation, nationalisation and confiscation. Companies not located in developed countries are also not
generally subject to uniform accounting, auditing and financial reporting standards, and auditing practices and
requirements may not be comparable to those applicable to companies in developed countries. Further, securities
not traded in developed countries tend to be less liquid and the prices of such securities more volatile. In addition,
settlement of trades in some such markets may be much slower and more subject to failure than in markets in
developed countries. Increased custodian costs as well as administrative difficulties (such as the applicability of the
laws of the jurisdictions of emerging or developing countries to custodians in such jurisdictions in various
circumstances, including bankruptcy, ability to recover lost assets, expropriation, nationalisation and record
access) may also arise from the maintenance of assets in such emerging or developing countries.
Financial Instruments linked to fund shares including hedge funds
Where the Underlying is or relates to one or more funds the relevant Financial Instruments reflect the
performance of such funds, which may be "hedge funds".
A hedge fund may trade and invest in a broad range of investment interests such as debt and equity securities,
commodities and foreign exchange and may enter into derivative transactions, including, without limitation,
futures and options. A hedge fund may often be illiquid and may only be traded on a monthly, quarterly or even
less frequent basis. For all these reasons and those described below, investing directly or indirectly in hedge funds
is generally considered to be risky. If the Underlying is a hedge fund which does not perform sufficiently, its value
will fall, possibly to zero. The hedge fund(s) reflected in the relevant Underlying from time to time and its/their
hedge fund trading advisors, as well as the markets and instruments in which they invest, are often not subject to
review by governmental authorities, self-regulatory organisations or other supervisory authorities.
The following is a non-exhaustive list of the risks associated with investing in hedge funds:
(a) Investment Manager
The performance of a hedge fund will depend on the performance of the investments selected by key individuals
associated with the day-to-day operations of the investment manager of the relevant hedge fund and upon the
expertise of such key individuals. Any withdrawal or other cessation of investment activities on behalf of the
investment manager by any of these individuals could result in losses and/or the termination or the dissolution of
the relevant hedge fund. The investment strategy, investment restrictions and investment objectives of a hedge
fund give its investment manager considerable discretion to invest the assets thereof and there can be no
guarantee that the investment manager's investment decisions will be profitable or will effectively hedge against
the risk of market or other conditions and thus such decisions may cause the value of the relevant hedge fund to
An investment manager may receive performance related fees, which may be substantial. The manner of
calculating such fees may create an incentive for the investment manager to make investments that are riskier or
more speculative than would be the case if such fees were not paid to the investment manager. In addition, since
the performance fees may be calculated on a basis that includes both unrealised and realised gains on the relevant
hedge fund's assets, such fees may be greater than if they were based solely on realised gains. If a hedge fund does
not perform or does not perform sufficiently to cover the fees, the value of the relevant hedge fund will fall and
may fall to zero.
(b) Lack of segregation of assets
A prime broker may be, or may have been, appointed in relation to a hedge fund and will accordingly be
responsible for custody, clearing, financing and reporting services with respect to the securities transactions
entered into by the relevant investment manager. Where investments by a hedge fund are classified by the
relevant prime broker as collateral, they may not be segregated by such prime broker from its own investments. As
a result, such investments may be available to the creditors of such prime broker in the event of its insolvency and
the relevant hedge fund may lose some or all of its interest in such investments.
(c) Hedging risks
An investment manager may utilise warrants, futures, forward contracts, swaps, options and other derivative
instruments involving securities, currencies, interest rates, commodities and other asset categories (and
combinations of the foregoing) for the purposes of establishing "market neutral" arbitrage positions as part of its
trading strategies and to hedge against movements in the capital markets. Hedging against a decline in the value of
a portfolio position does not eliminate fluctuations in the values of portfolio positions or prevent losses if the
values of such positions decline, but establishes other positions designed to gain from those same developments,
thus moderating the decline in the portfolio positions' value. Such hedging transactions may also limit the
opportunity for gain if the value of the portfolio position should increase. Moreover, it may not always be possible
for the investment manager to execute hedging transactions, or to do so at prices, rates or levels advantageous to
the hedge fund. The success of any hedging transactions will be subject to the movements in the direction of
securities prices and currency and interest rates, and stability or predictability of pricing relationships. Therefore,
while a hedge fund might enter into such transactions to reduce currency exchange rate and interest rate risks,
unanticipated changes in currency or interest rates may result in poorer overall performance for the hedge fund
than if it had not engaged in any such hedging transactions. In addition, the degree of correlation between price
movements of the instruments used in a hedging strategy and price movements in the portfolio position being
hedged may vary. Moreover, for a variety of reasons, the investment manager may not be able to, or may not seek
to, establish a perfect correlation between such hedging instruments and the portfolio holdings being hedged. An
imperfect correlation may prevent a hedge fund from achieving the intended hedge or expose a hedge fund to risk
Hedge funds may be able to borrow (or employ leverage) without limitation and may utilise various lines of credit
and other forms of leverage, including swaps and repurchase agreements. While leverage presents opportunities
for increasing a hedge fund's total return, it has the effect of potentially increasing losses as well. If income and
appreciation on investments made with borrowed funds are less than the required interest payments on the
borrowings, the value of the hedge fund will decrease. Additionally, any event which adversely affects the value of
an investment by a hedge fund would be magnified to the extent such hedge fund is leveraged. The cumulative
effect of the use of leverage by a hedge fund in a market that moves adversely to such hedge fund's investments
could result in a substantial loss to the hedge fund that would be greater than if the hedge fund were not
leveraged. Furthermore, any use by the hedge fund of swaps and other derivatives to gain exposure to certain
investments may leverage the hedge fund's assets, and subject it to the risks described above.
(e) Risks associated with the use of margin borrowings
An investment manager's anticipated use of short-term margin borrowings will result in certain additional risks to
the relevant hedge fund. For example, if securities pledged to brokers to secure a hedge fund's margin accounts
decline in value, such hedge fund could be subject to a "margin call", pursuant to which it must either deposit
additional funds with the broker or be the subject of mandatory liquidation of the pledged securities to
compensate for the decline in value. In the event of a sudden drop in the value of the hedge fund's assets, the
investment manager might not be able to liquidate assets quickly enough to pay off the margin debt. In such a
case, the relevant prime broker may liquidate additional assets of the hedge fund, in its sole discretion, in order to
satisfy such margin debt. The premiums for certain options traded on non-US exchanges may be paid for on
margin. If the investment manager sells an option on a futures contract, it may be required to deposit margin in an
amount equal to the margin requirement established for the futures contract underlying the option and, in
addition, an amount substantially equal to the premium for the option. The margin requirements imposed on the
writing of options, although adjusted to reflect the probability that out-of-the-money options will not be exercised,
can in fact be higher than those imposed in dealing in the futures markets directly. Whether any margin deposit
will be required for over-the-counter options will depend on the agreement of the parties to the transaction.
(f) Low credit quality and distressed securities
Hedge funds may invest in securities linked to particularly risky investments or to securities of issuers in weak
financial condition, experiencing poor operating results, having substantial capital needs or negative net worth,
facing special competitive or product obsolescence problems, or that are involved in bankruptcy or reorganisation
proceedings. Investments of this type may involve substantial risks that can result in substantial or, at times, even
total losses. Some of the risks inherent in investments in such entities are described in "Financial Instruments
linked to low credit quality securities" and "Financial Instruments linked to distressed securities" above.
Hedge funds may invest in derivative instruments (some of which may be complex) which seek to modify or
replicate the investment performance of particular securities, commodities, currencies, interest rates, indices or
markets on a leveraged or unleveraged basis. These instruments generally have counterparty risk and are subject
to the risks described in "Financial Instruments linked to Derivatives" above.
Hedge funds may also buy or sell options on a variety of underlying assets. The risk of writing (selling) options is
unlimited in that the writer of the option must purchase (in the case of a put) or sell (in the case of a call) the
underlying security at a certain price upon exercise. There is no limit on the price a hedge fund may have to pay to
meet its obligations as an option writer. As assets that can have no value at settlement, options can introduce a
significant additional element of leverage and risk to a hedge fund's market exposure. The use of certain options
strategies can subject a hedge fund to investment losses that are significant even in the context of positions for
which the relevant investment manager has correctly anticipated the direction of market prices or price
(h) Special risks associated with trading in over-the-counter derivatives
Some of the markets in which a hedge fund may effect derivative transactions are "over-the-counter" or
"interdealer" markets, which may be illiquid and are sometimes subject to larger spreads between the bid and
offer prices than exchange-traded derivative transactions. The participants in such markets are typically not
subject to credit evaluation and regulatory oversight, which would be the case with members of "exchange-based"
markets. This exposes the hedge fund to the risk of counterparty default or a delay in settlement and thus the risks
described in "Financial Instruments linked to Derivatives" above. These factors may cause a hedge fund to suffer a
loss due to adverse market movements while replacement transactions are executed or otherwise. Such
"counterparty risk" is accentuated where the hedge fund has concentrated its transactions with a single or small
group of counterparties. A hedge fund generally is not restricted from dealing with any particular counterparty or
from concentrating any or all of its transactions with one counterparty. In addition, if an investment manager
engages in such over-the-counter transactions, the relevant hedge fund will be exposed to the risk that the
counterparty (usually the relevant prime broker) will fail to perform its obligations under the transaction. The
valuation of over-the-counter derivative transactions is also subject to greater uncertainty and variation than that
of exchange-traded derivatives. The "replacement" value of a derivative transaction may differ from the
"liquidation" value of such transaction, and the valuation provided by a hedge fund's counterparty to such
transactions may differ from the valuation provided by a third party or the value upon liquidation of the
transaction. Under certain circumstances it may not be possible for a hedge fund to obtain market quotations for
the value of an over-the-counter derivatives transaction. A hedge fund may also be unable to close out or enter
into an offsetting over-the-counter derivative transaction at a time it desires to do so, resulting in significant
losses. In particular, the closing-out of an over-the-counter derivative transaction may usually only be effected
with the consent of the counterparty to the transaction. If such consent is not obtained, a hedge fund will not be
able to close out its obligations and may suffer losses.
(i) Illiquid investments
Hedge funds may make investments which are subject to legal or other restrictions on transfer or for which no
liquid market exists, such as equity securities in private companies and are subject to the risks described in
"Finance Instruments linked to private equity or Iliquid assets and real estate" above. In addition, futures positions
taken by a hedge fund may become illiquid because, for example, certain commodity exchanges limit fluctuations
in certain futures contract prices during a single day by regulations referred to as "daily price fluctuation limits" or
"daily limits" as described in "Financial Instruments linked to Commodities and/or Commodity Futures" above.
(j) Legal and regulatory risks
Legal and regulatory changes could adversely affect a hedge fund. Regulation of investment vehicles, such as
hedge funds and of many of the investments an investment manager is permitted to make on behalf of a hedge
fund, is still evolving and therefore subject to change. In addition, many governmental agencies, self-regulatory
organisations and exchanges are authorised to take extraordinary actions in the event of market emergencies. The
effect of any future legal or regulatory change on a hedge fund is impossible to predict, but could be substantial
A short sale involves the sale of a security that a hedge fund does not own in the hope of purchasing the same
security (or a security exchangeable therefor) at a later date at a lower price. To make delivery to the buyer, the
hedge fund must borrow the security and is obligated to return the security to the lender, which is accomplished
by a later purchase of the security. The hedge fund realises a profit or a loss as a result of a short sale if the price of
the security decreases or increases respectively between the date of the short sale and the date on which the
hedge fund covers its short position, i.e., purchases the security to replace the borrowed security. A short sale
involves the theoretically unlimited risk of an increase in the market price of the security that would result in a
theoretically unlimited loss.
(l) Commodities and Commodity futures
A hedge fund may invest in commodities and/or commodity futures and therefore be subject to the, inter alia, the
risks described in "Financial Instruments linked to Commodities and/or Commodity Futures" above.
(m) Hedge fund compensation
A hedge fund typically provides for a performance fee or allocation, over and above a basic advisory fee, to its
general partner, investment manager or person serving in an equivalent capacity. Performance fees or allocations
could create an incentive for an investment manager to choose riskier or more speculative underlying investments
than would otherwise be the case.
(n) "Soft Dollar" payments
In selecting brokers, banks and dealers to effect transactions on behalf a hedge fund, an investment manager may
consider such factors as price, the ability of the brokers, banks and/or dealers to effect transactions promptly and
reliably, their facilities, the operational efficiency with which transactions are effected, their financial strength,
integrity and stability and the competitiveness of commission rates in comparison with other brokers, banks and
dealers, as well as the quality, comprehensiveness and frequency of any products or services provided, or
expenses paid, by such brokers, banks and dealers. Products and services may include research items used by the
investment manager in making investment decisions, and expenses so paid may include general overhead
expenses of the investment manager. Such "soft dollar" benefits may cause an investment manager to execute a
transaction with a specific broker, bank, or dealer even though it may not offer the lowest transaction fees. An
investment manager is not required to (i) obtain the lowest brokerage commission rates or (ii) combine or arrange
orders to obtain the lowest brokerage commission rates on its brokerage business. If an investment manager
determines that the amount of commissions charged by a broker is reasonable in relation to the value of the
brokerage and research products or services provided by such broker, it may execute transactions for which such
broker's commissions are greater than the commissions another broker might charge. Such brokerage
commissions may be paid to brokers who execute transactions for the relevant managed account and which
supply, pay for or rebate a portion of the hedge fund's brokerage commissions to the hedge fund for payment of
the cost of property or services (such as research services, telephone lines, news and quotation equipment,
computer facilities and publications) utilised by the relevant investment manager or its affiliates. An investment
manager will have the option to use "soft dollars" generated by its investment activities to pay for the property
and services described above. The term "soft dollars" refers to the receipt by an investment manager of property
and services provided by brokers (or futures commission merchants in connection with futures transactions)
without any cash payment by such investment manager based on the volume of revenues generated from
brokerage commissions for transactions executed for clients of the investment manager. An investment manager
will consider the amount and nature of research services provided by brokers, as well as the extent to which such
services are relied upon, and will attempt to allocate a portion of the brokerage business of the relevant managed
account on the basis of those considerations.
(o) Special risks associated with trading in forward contracts
Hedge funds may engage in forward trading. Forward contracts, unlike futures contracts, are not traded on
exchanges and are not standardised, rather, banks and dealers act as principals in these markets, negotiating each
transaction on an individual basis. Forward and "cash" trading is substantially unregulated; there is no limitation on
daily price movements and speculative position limits are not applicable. The principals who deal in the forward
markets are not required to continue to make markets in the currencies or commodities they trade and these
markets can experience periods of illiquidity, sometimes of significant duration. There have been periods during
which certain participants in these markets have been unable to quote prices for certain currencies or
commodities or have quoted prices with an unusually wide spread between the price at which they were prepared
to buy and that at which they were prepared to sell. Disruptions can occur in any market traded by the hedge
funds due to unusually high trading volume, political intervention or other factors. Market illiquidity or disruption
could result in major losses to a hedge fund.
(p) Concentration of investments
Although in general a hedge fund will aim to invest in diversified investments, the investment manager in respect
of a hedge fund may invest such hedge fund's assets in a limited number of investments that may be concentrated
in a few countries, industries, sectors of an economy and/or issuers. As a result, although investments by hedge
funds should be diversified, the negative impact on the value of the relevant hedge fund from adverse movements
in a particular country, economy or industry or in the value of the securities of a particular issuer could be
considerably greater than if such hedge fund were not permitted to concentrate its investments to such an extent.
Hedge funds may invest on the basis of certain short-term market considerations. As a result, the turnover rate
within hedge funds is expected to be significant, potentially involving substantial brokerage commissions, fees and
other transaction costs.
(r) Operational and human error
The success of a hedge fund depends in part upon the relevant investment manager's accurate calculation of price
relationships, the communication of precise trading instructions and ongoing position evaluations. In addition, an
investment manager's strategies may require active and ongoing management of durations and other variables,
and dynamic adjustments to a hedge fund's positions. There is the possibility that, through human error, oversight
or operational weaknesses, mistakes could occur in this process and lead to significant trading losses and an
adverse effect on the net asset value of the relevant hedge fund.
(s) Reliability of valuations
Hedge funds are valued pursuant to the hedge fund's instrument governing such valuations. The governing
instruments of hedge funds generally provide that any securities or investments which are illiquid, not traded on
an exchange or in an established market or for which no value can be readily determined, will be assigned such fair
value as the investment manager may determine in its judgement based on various factors. Such factors include,
but are not limited to, aggregate dealer quotes or independent appraisals. Such valuations may not be indicative of
what the actual fair market value would be in an active, liquid or established market.
(t) Investment strategies
Hedge funds are a relatively heterogeneous asset class in which the investment managers may determine their
strategies in their sole discretion. As a consequence there is no commonly accepted definition for the strategies
employed by hedge funds. It can even be impossible to associate certain hedge funds with only one specific
definition of a strategy. Furthermore there are various levels on which classifications can be made: any general
strategy consists of various sub-strategies which may be very different from each other.
Financial Instruments may be linked to or be futures or options or issued as "over the counter" or bilateral
contracts for which there is no trading market.
Financial Instruments linked to or which are Futures
Transactions in futures involve the obligation to make, or to take, delivery of the underlying asset of the contract
at a future date, or in some cases to settle the position with cash. They carry a high degree of risk. The ‘gearing’ or
‘leverage’ often obtainable in futures trading means that a small movement can lead to a proportionately much
larger movement in the value of the investment, and this can work against an investor as well as for it. Futures
transactions have a contingent liability, and investors should be aware of the implications of this, in particular any
Margined transactions require the purchaser to make a series of payments against the purchase price, instead of
paying the whole purchase price immediately. If an investor trades in contracts for differences or sell options, it
may sustain a total loss of the margin it deposits to establish or maintain a position. If the market moves against an
investor, it may be called upon to pay substantial additional margin at short notice to maintain the position. If it
fails to do so within the time required, its position may be liquidated at a loss and it will be responsible for the
resulting deficit. Even if a transaction is not margined, it may still carry an obligation to make further payments in
certain circumstances over and above any amount paid when it entered the contract.
Financial Instruments linked to or which are Options
Financial Instruments may be lined to options with different characteristics subject to the following conditions.
Buying options involves less risk than selling options because, if the price of the Underlying asset moves against the
investor, it can simply allow the option to lapse. The maximum loss is limited to the premium, plus any commission
or other transaction charges.
If an investor writes an option, the risk involved is considerably greater than buying options. It may be liable for
margin to maintain its position and a loss may be sustained well in excess of the premium received. By writing an
option, the investor accepts a legal obligation to purchase or sell the Underlying if the option is exercised against it,
however far the market price has moved away from the exercise price. If the investor already owns the Underlying
which it has contracted to sell (when the option will be known as a ‘covered call option’) the risk is reduced. If it
does not own the Underlying (an ‘uncovered call option’) the risk can be unlimited. Only experienced persons
should contemplate writing uncovered options, and then only after securing all details of the applicable conditions
and potential risk exposure.
Financial Instruments linked to or which are Contracts for Differences
Futures and options contracts can also be referred to as contracts for differences. These can be options and
futures on any index, as well as currency and interest rate swaps. However, unlike other futures and options, these
contracts can only be settled in cash. Investment in a contract for differences carries the same risks as investing in
a future or an option and you should be aware of these as set out above.
Financial Instruments linked to or which are Off-exchange transactions in derivatives
While some off-exchange markets are highly liquid, transactions in off-exchange or "non-transferable" derivatives
may involve greater risk than investing in on-exchange derivatives because there is no exchange market on which
to close out an open position. It may be impossible to liquidate an existing position, to assess the value of the
position arising from an off-exchange transaction or to assess the exposure to risk. Bid prices and offer prices need
not be quoted, and, even where they are, they will be established by dealers in these instruments and
consequently it may be difficult to establish what is a fair price.
D. Market Factorism
1. Market Factors
1.1 Valuation of an Underlying
An investment in any Financial Instrument involves risk regarding the value of the relevant Underlying or the
basket constituents comprising the relevant Underlying. The value of the relevant Underlying or the relevant
basket constituents may vary over time and may increase or decrease by reference to a variety of factors which
may include corporate actions, macroeconomic factors and speculation
1.2 The Historical Performance of the Underlying or the Basket Constituents is not an Indication of Future
The historical value (if any) of the relevant Underlying or the basket constituents comprising the relevant
Underlying does not indicate its or their future performance. Changes in the value of the relevant Underlying or
one or more of the relevant basket constituents, as applicable, will affect the trading price of the relevant Financial
1.3 The Basis of Calculating the Level of the Underlying or any Basket Constituents may Change over Time
The basis of calculating the level of the relevant Underlying or any basket constituent may from time to time be
subject to change (as described in the offering documents relating to the issue of the relevant Financial
Instruments) which may affect the market value of the relevant Financial Instruments at any time and therefore
any amount payable or deliverable on settlement.
1.4 The Value of an Underlying or any Basket Constituents will Affect the Value of the relevant Financial
The value of the relevant Underlying will affect the value of the relevant Financial Instruments. Where the relevant
Underlying is a basket, the value of such Underlying on any day will reflect the value of the relevant basket
constituents on such day. Changes in the composition of the relevant Underlying and factors (including those
described herein) which either affect or may affect the value of the relevant Underlying or any relevant basket
constituents will affect the value of the relevant Financial Instruments. Where the value of the Underlying or any
basket constituents is determined in a different currency to the settlement currency of the relevant Financial
Instruments, investors may be exposed to exchange rate risk.
1.5 Exchange Rate Risk
Prospective investors should be aware that an investment in Financial Instruments may involve exchange rate
risks. For example, the settlement currency of the relevant Financial Instruments may be different from the
currency of an investor's home jurisdiction or the currency in which an investor wishes to receive funds.
Exchange rates between currencies are determined by factors of supply and demand in the international currency
markets which are influenced by macroeconomic factors, speculation and central bank and government
intervention or other political factors (including the imposition of currency controls and restrictions). Fluctuations
in exchange rates may affect the value of Financial Instruments and any amounts payable in respect of Financial
1.6 Interest Rate Risk
An investment in Financial Instruments may involve interest rate risk where there are fluctuations in the interest
rates payable on deposits in the settlement currency of the relevant Financial Instruments. This may influence the
market value of such Financial Instruments. Interest rates are determined by factors of supply and demand in the
international money markets which are influenced by macroeconomic factors, speculation and central bank and
government intervention or other political factors. Fluctuations in short term and/or long term interest rates may
affect the value of Financial Instruments. Where an Underlying or a basket constituent is a fixed income security,
the value of the Financial Instruments relating to such Underlying or such basket constituent is expected to be
particularly affected by interest rate fluctuations.
2. Market Value
The market value of Financial Instruments during their term depends primarily on the value and the volatility of
the relevant Underlying or the relevant basket constituents and the level of interest rates for instruments of
The level of market volatility is not purely a measurement of the actual volatility, but is largely determined by the
prices for instruments which offer investors protection against such market volatility. The prices of these
instruments are determined by forces of supply and demand in the options and derivative markets generally.
These forces are, themselves, affected by factors such as actual market volatility, expected volatility,
macroeconomic factors and speculation.
Interest rate changes generally have the same impact on the value of Financial Instruments as for fixed rate debt
securities. Rising interest rates will under normal conditions result in a lower, falling interest rates in a higher,
value of the relevant Financial Instruments.
If Financial Instruments are capital protected, the value of such Financial Instruments during their term will under
normal market conditions not fall below the value of a zero coupon bond with comparable maturity.
3. Certain Hedging Considerations
Certain risks apply to purchasers that acquire Financial Instruments for hedging purposes.
Prospective purchasers intending to purchase Financial Instruments for the purpose of hedging their exposure to
an Underlying or any basket constituents should recognise the risks of utilising Financial Instruments in such
manner. No assurance is or can be given that the value of Financial Instruments will correlate with movements in
the value of an Underlying or any basket constituents and the composition of the relevant Underlying or any
relevant basket constituents may change over time. Furthermore, it may not be possible to liquidate Financial
Instruments at a price which directly reflects the value of the relevant Underlying or any relevant basket
constituents. Therefore, there can be no assurance as to the level of any correlation between the return on an
investment in an issue of Financial Instruments and the return on a direct investment in the relevant Underlying or
any relevant basket constituents.
Hedging transactions in order to limit the risks associated with Financial Instruments might not be successfull.
4. Financial Instruments Maybe Illiquid
Financial Instruments which are bilateral contracts or "bespoke over-the-counter contracts" may have no
secondary market therefore may not be tradeable.
It is not possible to predict if and to what extent a secondary market may develop in any Financial Instruments or
at what price Financial Instruments will trade in the secondary market or whether such market will be liquid or
illiquid. Application may be made to list or quote or admit to trading Financial Instruments on a stock exchange(s)
or quotation system(s) as so indicated in the offering documents relating to an issue of Financial Instruments. If an
issue of Financial Instruments is so listed or quoted or admitted to trading, no assurance is given by PSS that any
such listing or quotation or admission to trading will be maintained. The fact that Financial Instruments may be so
listed or quoted or admitted to trading does not necessarily lead to greater liquidity than if they were not so listed
or quoted or admitted to trading.
If Financial Instruments are not listed or quoted or admitted to trading on any stock exchange or quotation system,
pricing information for such Financial Instruments may be more difficult to obtain and the liquidity of such
Financial Instruments may be adversely affected. The liquidity of Financial Instruments may also be affected by
restrictions on offers and sales of Financial Instruments in some jurisdictions.
PSS may, but is not obliged to, at any time purchase Financial Instruments at any price in the open market or by
tender or private agreement. Any Financial Instruments so purchased may be held or resold or surrendered for
cancellation. Since PSS may be the only market-maker in the relevant Financial Instruments, the secondary market
may be limited. The more limited the secondary market is, the more difficult it may be for holders of such Financial
Instruments to realise value for such Financial Instruments prior to settlement of such Financial Instruments. In
relation to PSS acting as market-maker, see "6. Market-Making for Financial Instruments" in "E. Conflicts of
E. Conflicts of Interest
1. Transactions Involving an Underlying
PSS and/or its affiliates may from time to time engage in transactions involving an asset comprising an Underlying
for its/their proprietary accounts and/or for accounts under its/their management. Such transactions may have a
positive or negative effect on the value of the relevant Underlying and consequently upon the value of the relevant
Financial Instruments. As used in this section "Conflicts of Interest", references to an Underlying shall be deemed
to include any of its constituents, if applicable.
2. Acting in other Capacities
PSS and/or its affiliates may from time to time act in other capacities with regard to Financial Instruments, such as
calculation agent, agent and/or index sponsor. Such functions can allow PSS to determine the composition of an
Underlying or to calculate its value, which could raise conflicts of interest where securities or other assets issued
by PSS itself and/or any of its affiliates can be chosen to be part of the relevant Underlying, or where PSS maintains
a business relationship with the issuer of such securities or assets.
3. Issuing of other Derivative Instruments in respect of an Underlying
PSS and/or its affiliates may issue other derivative instruments in respect of an Underlying and the introduction of
such competing products into the marketplace may affect the value of other Financial Instruments linked to the
4. Conducting Hedging Transactions
PSS may use all or some of the proceeds received from the sale of Financial Instruments to enter into hedging
transactions. PSS believes that such hedging activity will under normal circumstances not have a material impact
on the value of the relevant Financial Instruments. However, it cannot be assured that PSS's hedging activities will
not affect such value. The value of Financial Instruments might in particular be affected by the liquidation of all or
a portion of the relevant hedging positions (a) at or about the time of the maturity or expiration of such Financial
Instruments or (b), if such Financial Instruments provide for a knock-out, knock-in or a similar feature, at the time
when the price or value of the relevant Underlying approaches the relevant price or level for the knock-out, knockin
or other feature.
5. Issue Price
The issue price charged for Financial Instruments can, in addition to loading charges, management or other fees
charged, comprise a premium on the original mathematical ("fair") value of the relevant Financial Instruments
which is not visible to investors. Such premium is determined by PSS in its discretion and can differ from premiums
charged by other issuers for comparable securities.
6. Market-Making for Financial Instruments
PSS, or an agent on its behalf, may act as market-maker for Financial Instruments. In such market-making, PSS or
its agent will, to a large extent, determine the price of the relevant Financial Instruments itself. The prices quoted
by such market-maker will usually not correspond to the prices which would have prevailed without such marketmaking
and in a liquid market.
Circumstances taken into account by the market-maker when setting the quoted bid-offer prices in the secondary
market notably include Financial Instruments' fair value, which, among other things, depends on the value of the
relevant Underlying, as well as a certain bid-offer spread targeted by the market-maker. The market-maker will in
addition regularly take into account a loading charge originally raised for the relevant Financial Instruments and
any fees or costs which at maturity of the relevant Financial Instruments are to be subtracted from any amount
payable or deliverable (including management, transaction or other fees charged on the basis of the terms and
conditions relating to the relevant Financial Instruments). Furthermore, the prices quoted in the secondary market
will be influenced, for example, by a premium on the relevant Securities' original value contained in their issue
price (see paragraph 5. above), and, where relevant, by dividends paid or received by the relevant Underlying or
other proceeds which, due to the relevant Securities' structure, are economically attributable to PSS.
The bid-offer spread for Financial Instruments will be set by the market-maker based on supply and demand for
the relevant Financial Instruments and certain revenue considerations.
Certain costs, like for example management fees charged on the basis of the terms and conditions of the relevant
Financial Instruments, are in many cases not taken out of the quoted prices on a consistent basis over the term of
the relevant Financial Instruments, but are subtracted in their entirety from the relevant Financial Instruments' fair
value at an earlier point in time, as determined by the market-maker in its discretion. The same applies for a
premium contained in the issue price and, where relevant, for dividends and other proceeds of the relevant
Underlying which are economically attributable to PSS, often are not subtracted when the relevant Underlying, or
its constituents, are traded "ex dividend", but which are subtracted at an early stage of the term of the relevant
Financial Instruments' based on expected dividends for the entire term or a certain time span. The rate at which
and when such costs are subtracted depends, inter alia, on the net flow back of Financial Instruments to the
Subsequently, the prices quoted by the market-maker can substantially differ from the fair value of the relevant
Financial Instruments, or the value to be expected economically on the basis of the factors mentioned above, at
the relevant time. In addition, the market-maker can at any time alter the methodology used to set the quoted
prices, e. g. increase or decrease the bid-offer spread.
7. Market-Making for an Underlying
PSS and/or its affiliates may also act as underwriter in connection with future offerings of an Underlying or may act
as financial adviser to the issuer of an Underlying or in a commercial banking capacity for the issuer of an
Underlying. Such activities could present certain conflicts of interest and may affect the value of Financial
Instruments linked to such Underlying.
8. Acting as Underwriter or otherwise for the issuer of an Underlying
PSS and/or its affiliates may also act as underwriter in connection with future offerings of an Underlying or may act
as financial adviser to the issuer of an Underlying or in a commercial banking capacity for the issuer of an
Underlying. Such activities could present certain conflicts of interest and may affect the value of Financial
Instruments linked to such Underlying.
9. Obtaining of Non-public Information
PSS and/or its affiliates may acquire non-public information with respect to an Underlying, and neither PSS nor any
of its affiliates undertakes to disclose any such information to any holder of Financial Instruments. In addition, one
or more of PSS's affiliates may publish research reports with respect to an Underlying. Such activities could present
conflicts of interest and may affect the value of Financial Instruments.
The price of certain Financial Instruments may be influenced by measures taken to stabilise the price of such
Financial Instruments. Stabilisation enables the market price of a security to be maintained artificially during the
period when a new issue of securities is sold to the public. Stabilisation may affect not only the price of the new
issue but also the price of other securities relating to it. Local regulators may allow stabilisation in order to help
counter the fact that, when a new issue comes into the market for the first time, the price may sometimes drop for
a time before buyers are found.
GENERAL BUSINESS TERMS
1. DEFINITIONS - INTERPRETATION OF TERMS
1.1. In these General Business Terms, the following terms shall, unless the context otherwise requires, have the following
meanings and may be used in the singular or plural as appropriate:
“Account” shall mean a transaction account of the Client at PSS;
“Account Statement” shall mean a periodic statement of the transactions credited or debited to an Account;
“Account Summary” shall mean a statement of the Client’s securities portfolio, open positions, margin
requirements, cash deposit, etc. at a specific point in time;
“Agent” shall mean an individual person or a legal entity undertaking a transaction in his, her or its own name, but doing so
on behalf of another person;
“Authorized Person” shall mean a person authorized by the Client to give instructions to PSS;
“Business Day” shall mean any day on which banks are open for business in Germany;
“CFD” and “CFD Contract” shall mean a contract for difference which is a contract in which an investor pays or is paid the
difference between the opening and closing price of the relevant security or index;
“Client” shall mean you in your capacity as a customer of PSS;
“Collateral” shall mean any securities or other assets deposited with PSS by the Client;
“Commission, Charges & Margin Schedule” shall mean the schedule of commissions, charges, margin, interest and other
rates which at any time may be applicable to the Services as determined by PSS on a current basis;
“Contract” shall mean any contract, whether oral or written, for the purchase or sale of any commodity, security, currency or
other financial instrument or property, including any option, future, CFD or other transaction relating thereto, entered into by
PSS with the Client;
“Counterparties” shall mean banks and/or brokers through which or whom PSS may cover its Contracts with clients,
including the Client;
“Events of Default” shall have the meaning given to this term in Clause 16;
“Inside information” shall mean non-published information that is likely to have an effect on the pricing of a Contract
if it was made public;
“Introducing Broker” shall mean a financial institution or an advisor who is remunerated by PSS and/or its clients for
referring such clients to PSS, providing advice to such clients and/or brokering the execution of transactions
between such clients and PSS;
“Margin Trade” shall mean a Contract opened and maintained based on a margin deposit, as opposed to, a Contract
based on a purchase price;
“Market Rules” shall mean the rules, regulations, customs and practices of any exchange, clearing house or other
organization or market involved in the conclusion, execution or settlement of a transaction or Contract and includes any
determination, decision or other exercise of any power or authority by any such exchange, clearing house or other
organization or market;
“OTC” shall mean any Contract concerning a commodity, security, currency or other financial instrument or property, including
any option, future or CFD which is not traded on a regulated stock or commodity exchange but “over the counter” by PSS,
whether as a market maker as described in Clause 12 or otherwise;
“Principal” shall mean an individual person or a legal entity, which is party to a transaction;
“PSS” or PSSFX is a trade name of Sparkasse Rein, Limited.;
“Services” shall mean the services to be provided by PSS subject to the Terms;
“Terms” shall mean these General Business Terms governing the relationship between the Client and PSS, as may be amended
from time to time;
“Trade Confirmation” shall mean a message from PSS to the Client confirming the Client’s entry into a Contract;
“Trading Platform” shall mean any online trading platform made available by PSS under the Terms;
“Unit” shall mean a fraction of a UMA and, as such, is an OTC instrument quoted by PSS as market maker at buy and sell
prices and therefore, should be seen as a derivatives instrument;
“Unitized Managed Account” or “UMA” shall mean a pool of the combined investments of a number of investors managed
by an asset manager, who may or may not be employed by PSS, provided that such pool of investments shall not constitute
a separate legal entity nor a stock exchange listed instrument.
1.2. If there is any conflict between the Terms and relevant Market Rules, the Market Rules shall prevail.
1.3. In the Terms, any reference to a person shall include bodies corporate, unincorporated associations, partnerships and individuals.
1.4. Headings and notes in the Terms are for reference only and shall not affect the construction and interpretation of the Terms.
1.5. In the Terms, any reference to any law, statute, regulation or enactment shall include references to any statutory
modification or re-enactment thereof or to any regulation or order made under such law, statute, regulation or
enactment (or under such modification or re-enactment).
2. RISK OF ACKNOWLEGMENT
2.1. The Client acknowledges, recognizes and understands that trading and investment in securities, as well as in leveraged and nonleveraged
a. highly speculative;
b. may involve an extreme degree of risk; and
c. if the Client trades on margin, appropriate only for persons who can assume risk of loss in excess of their margin
2.2. The Client acknowledges, recognizes and understands that:
a. due to the low margin normally required in Margin Trades, price changes on the underlying asset may result in
b. when the Client directs PSS to enter into any transaction, any profit or loss arising as a result of a fluctuation in
the asset or the underlying asset will be entirely for theClient’s account and risk;
c. the Client warrants that the Client is willing and able, financially and otherwise, to assume the risk of trading in
d. the Client agrees not to hold PSS responsible for losses incurred as a consequence of PSS carrying the Client’s Account
and following the Client’srecommendations;
e. the Client accepts that any guarantees of profits or of avoidance of losses are impossible in investment trading;
f. the Client has received no guarantees of profits or of avoidance of losses or similar representations from PSS, from any
of its associates or representatives or from any other entity with which the Client is conducting a PSS account, and the
Client has not accepted the Terms, nor will the Client act in the future, in consideration of or in reliance upon any such
guarantees or similar representations.
3.1. Subject to the Client fulfilling its obligations under the Terms, PSS may enter into transactions with the Client in the form of the
following investments and instruments:
a. futures and CFDs on commodities, securities, interest rate and debt instruments, stock or other indices, currencies and
base and precious metals;
b. spot and forward bullion, currencies and OTC derivatives;
c. securities, including shares, bonds and other debt instruments, including government and publicissues;
d. options and warrants to acquire or dispose of any of the instruments listed above, including options on options;
e. managed assets, whether as OTC or stock exchange traded instruments; and
f. such other investments and instruments as PSS may from time to time agree.
3.2. When the Client purchases one or more Units in a UMA or other pool of managed assets, the Client thereby acknowledges and
agrees that the designated asset manager of such UMA or pool of managed assets has full power and authority to buy, sell and
trade in the financial markets on margin or otherwise, for the account and risk of such UMA or pool of managed assets and
thereby indirectly the Client’s account and risk.
3.3. The Client has no intention of being, and acknowledges, understands and accepts that it may not be, actively involved in the
trading and transactions of UMAs or other pools of managed assets, such trading and transactions being undertaken by a
designated asset manager.
3.4. The Client acknowledges, understands and accepts that a designated asset manager may utilize proprietary trading methods
as a basis of all trading and transactions in UMAs or other pools of managed assets under the Terms.
3.5. The Client acknowledges, understands and accepts that the trading and transactions undertaken by an asset manager are
undertaken on the condition that the Client in all respects renounces and waives any possible claims of compensation against
PSS, the asset manager and/or the UMAs or other pools of managed assets for any financial or other losses which the Client may
suffer as a consequence of such trading and transactions by an asset manager. The Client furthermore acknowledges,
understands and accepts that the Client is in all respects solely and exclusively liable for all such financial or other losses without
any recourse against PSS, an asset manager or the UMA or other pool of managed assets as a consequence hereof.
3.6. The Services provided by PSS may involve:
a. margined transactions;
b. short sales (i.e. sales where one party to the contract is obliged to deliver an asset which it does not possess); or
c. transactions in investments which are:
i . traded on exchanges which are not recognized or designated investment exchanges;
ii . not traded on any stock or investment exchange; and/or
iii. not readily realizable investments.
3.7. Orders may be placed as market orders to buy or sell an instrument as soon as possible at the price obtainable in the market or
as limit and stop orders to trade when the price reaches a predefined level, as applicable to the various instruments offered.
Limit orders to buy and stop orders to sell must be placed below the current market price, and limit orders to sell and stop
orders to buy must be placed above the current market price. If the bid price forsell orders or ask price for buy orders is
reached, the order will be filled as soon as possible at the price obtainable in the market. Limit and stop orders are thus not
guaranteed executable at the specified level or amount, unless explicitly stated by PSS for the specific order.
3.8. In relation to any transaction or Contract, PSS will effect such transaction or Contract as Principal unless it is specifically
agreed that PSS shall act as Agent for the Client.
3.9. All transactions in securities are executed as immediate trades, unless otherwise agreed. In immediate trades, PSS acts as the
counterparty to the Client, who trades at a price offered by PSS.
3.10. The Client shall, unless otherwise agreed in writing, enter into Contracts as Principal. If the Client acts on behalf of a Principal,
whether or not the Client identifies that Principal to PSS, PSS shall not be obliged to accept the said Principal as a Client unless
otherwise agreed in writing, and until such time, PSS shall be entitled to consider the Client as Principal in relation to the
3.11. In the event PSS provides advice, information or recommendations to the Client, PSS shall not be responsible for the
profitability of such advice, information or recommendation as further stipulated in Clause 18, and the Client acknowledges,
recognizes and understands that:
a. all transactions in exchange-traded investments and many Contracts will be effected subject to, and in accordance
with, Market Rules;
b. in particular, Market Rules usually contain wide powers in an emergency or otherwise undesirable situations;
c. if any exchange or clearing house takes any action which affects a transaction or Contract then PSS is entitled to
take any action which it, in its discretion, considers desirable in the interests of the Client and/ or PSS;
d. PSS shall not be liable for any loss as further stipulated in Clause 18.3 and suffered by the Clientas
a result of the acts or omissions of any exchange, clearing house or other organization or market or any action
reasonably taken by PSS as a result of such acts or omissions;
e. where any transaction is effected by PSS as Agent for the Client, delivery or payment (as appropriate) by the other party
to the transaction shall be at the Client’s entire risk;
f. PSS’s obligation to deliver the proceeds of sale of investments to the Client or to an account of the Client or any other
person on the Client’s behalf shall be conditional upon receipt by PSS of deliverable documents or sale proceeds (as
appropriate) from the other party or parties to the transaction;
g. PSS’s trading hours are normally 8 p.m. central European Time (CET) on Sunday through 11 p.m. CET on Friday. PSS
may be closed on the main European holidays;
h. PSS may, without prior notice, in whole or in part, on a permanent or temporary basis withdraw any account facility
provided by PSS to the Client. Situations where PSS may take such action include, but are not limited to, where:
i . PSS considers that the Client may be in possession of Inside information; ii . PSS
considers that there are abnormal trading conditions; and
iii. PSS is unable to calculate prices in a relevant Contract due to the unavailability of relevant market
3.12. PSS shall not provide any advice to the Client on any tax issues related to the Services provided by PSS under the Terms. The
Client is advised to obtain individual counsel from its financial advisor, auditor or legal counsel as to any personal tax
implications of the Services offered by PSS.
3.13. Notwithstanding any other provision of the Terms, in providing Services, PSS shall be entitled to take any action it considers
necessary, in its absolute discretion, to ensure compliance with the Market Rules and all other applicable laws and regulatory
4. PSS AND THE CLIENT
4.1. The Client may provide PSS with oral or written instructions (which shall include instructions provided via the internet or by email
as described below). PSS may acknowledge instructions orally or in writing, as appropriate.
4.2. The persons authorized to give PSS instructions on the Client’s behalf shall be those notified by the Client to PSS and may be
varied by written notice to PSS. PSS shall not be bound by any such variation until writtennotice
is actually received and confirmed by PSS. PSS shall be entitled to act upon the oral or written instructions of any person who
appears to PSS to be an Authorized Person, notwithstanding that the person is not, in fact, so authorized.
4.3. The Trading Platform provides the ability to execute certain Contracts. Furthermore, details regarding Accounts, Trade
Confirmations and messages from PSS to the Client may be available on the Trading Platform. The following terms apply to
Contracts executed on the internet:
a. PSS and its representatives, agents or brokers shall not be liable to the Client for any loss, expense, cost or liability
suffered or incurred by the Client due to the failure of the system, transmission failure or delays or similar technical
errors unless PSS generated such error with clear intention of manipulating market behavior and/or order execution;
b. PSS shall not be liable to the Client for any loss the Client might suffer due to errors in quotes which are the result of
typing errors committed by PSS or PSS’s erroneous interpretation of information entered into the system by the
Client. PSS is entitled to make necessary corrections in the Client’s Account to fix any such error taking into account
the market value of any asset in question at the time when the erroroccurred;
c. PSS shall offer real-time tradable prices to the Client. Due to delayed transmission between the Client and PSS, the
price offered by PSS may have changed or jumped before an order from the Client is received by PSS. If automatic
order execution is offered to the Client, PSS shall be entitled to change the price on which the Client’s order is
executed to the market value at which the order from the Client was received, such instances include the exposure to
runaway gaps or gap risks or any sudden change in price already external in nature to PSS;
d. the Trading Platform may be available in several versions, which may be differentiated in various aspects including,
but not limited to, the level of security applied, products and services available, etc. PSS shall not be liable to the
Client for any loss, expense, cost or liability suffered or incurred by the Client due to the Client using a version
different from PSS’s standard version with all available updatesinstalled;
e. the Client shall be responsible for all orders, and for the accuracy of all information, sent via the internet using the
Client’s name, password or any other personal identification means implemented to identify theClient;
f. the Client is obliged to keep passwords secret and ensure that third parties do not obtain access to the Client’s
g. the Client shall be liable to PSS for Contracts executed by means of the Client’s password even if such use might be
unauthorized or wrongful; and
h. regardless of the fact that the Trading Platform might confirm that a Contract is executed immediately when the
Client transmits instructions via the Trading Platform, the Trade Confirmation forwarded by PSS or made available
to the Client on the Trading Platform constitutes PSS’s confirmation of a Contract.
4.4. Any instruction sent via the Trading Platform or by e-mail by the Client shall only be deemed to have been received and shall
only then constitute a valid instruction and/or binding Contract between PSS and the Client when such instruction has been
recorded as executed by PSS and confirmed by PSS to the Client through a Trade Confirmation and/or the Account Statement,
and the mere transmission of an instruction by the Client shall not constitute a binding Contract between PSS and the Client.
4.5. The Client shall promptly provide any instructions to PSS as PSS may require. If the Client does not provide such instructions
promptly, PSS may, in its absolute discretion, take such steps at the Client’s cost, as PSS considers necessary or desirable for its
own protection or the protection of the Client. This provision shall also apply in situations when PSS is unable to obtain contact
with the Client.
4.6. If the Client does not provide PSS with notice of its intention to exercise an option or another Contract which requires an
instruction from the Client at the time stipulated by PSS, PSS may treat the option or Contract as abandoned by the Client. If
a Contract can be prolonged on expiry, PSS may, at its sole discretion, choose to prolong or to close such Contract.
4.7. PSS may (but shall not in any circumstances be obliged to) require confirmation, in such form as PSS may reasonably
request, if an instruction is to close an Account or remit money due to the Client or if it otherwise appears to PSS that
such confirmation is necessary or desirable.
4.8. The Client shall indemnify PSS and keep PSS indemnified against all losses which PSS may suffer as a result of any error in any
instruction given by an Authorized Person or as a result of PSS acting on any instruction, which is, or appears to be, from an
4.9. PSS may, in its sole discretion and without explanation, refuse to act upon any instruction.
4.10. In general, PSS shall act according to instructions as soon as practicably possible and shall, as far as trading instructions
are concerned, act within a reasonable time frame taking into account the nature of the instructions. However, if after
instructions are received, PSS believes that it is not reasonably practicable to act upon such instructions within a
reasonable time, PSS may either defer acting upon those instructions until it is, in PSS’s reasonable opinion, practicable
to do so or notify the Client that PSS is refusing to act upon such instructions.
4.11. It is possible that errors may occur in the prices of transactions quoted by PSS. In such circumstances, without prejudice to any
rights it may have under Norwegian, PSS shall not be bound by any Contract which purports to have been made (whether or not
confirmed by PSS) at a price which:
a. PSS is able to substantiate to the Client was manifestly incorrect at the time of the transaction;or
b. was, or ought reasonably to have been, known by the Client to be incorrect at the time of thetransaction.
4.12. Trading strategies aimed at exploiting errors in prices (commonly known as “sniping”) are not accepted by PSS. If PSS, at its
sole discretion in good faith, determines that the Client is taking advantage or attempting to take advantage of misquotes or is
performing other forms of abusive trading, PSS is entitled to take one or more of the following countermeasures: reasonable
time, PSS may either defer acting upon those instructions until it is, in PSS’s reasonable opinion, practicable to do so or notify
the Client that PSS is refusing to act upon suchinstructions.
a. adjust the price spreads available to the Client;
b. restrict the Client’s access to streaming instantly tradable quotes, including providing manual quotationonly;
c. retrieve from the Client’s Account any historic trading profits that have been gained through such abuse of liquidity
as determined by PSS in its sole discretion in good faith, at any time during the Client relationship; and/or
d. terminate the Client relationship immediately by giving written notice.
Moreover, PSS does not permit the practice of arbitrage and scalping on the PSS Trading Platforms. Transactions that rely on
price latency arbitrage opportunities may be revoked. PSS reserves the right to make the necessary corrections or adjustments on
the account involved. Accounts that rely on arbitrage strategies may at PSS’
sole discretion be subject to termination of trader’s account. Any dispute arising from such arbitrage and/or manipulation will be
resolved by PSS in its sole and absolute discretion. PSS reserves the right to withhold withdrawals until such matters are resolved.
Any action or resolution stated herein shall not waive or prejudice any rights or remedies which PSS may have against you, your
company and its officers, all of which are expressly reserved.
4.13. If the Client is more than one person (for example, joint accountholders):
a. the liabilities of each such person shall be direct, joint andseveral;
b. PSS may act upon instructions received from any one person who is, or appears to PSS to be, such a person, whether
or not such person is an Authorized Person;
c. any notice or other communication provided by PSS to one such person shall be deemed to have been provided to all
such persons; and
d. the rights of PSS under Clause 16 shall apply if an event described in Clause 16 shall be deemed to have occurred in
respect of any one of such persons.
4.14. The Client agrees that PSS may record all telephone conversations, internet conversations (chat), and meetings between the
Client and PSS and may disclose such recordings or transcripts from such recordings, toany
party (including, but not limited to, any regulatory authority and/or court of law) to whom PSS, in its entire discretion, believes it
to be desirable or necessary to disclose such information in connection with any dispute or anticipated dispute between PSS and
the Client. However, technical reasons may prevent PSS from recording a conversation, and, in any event, recordings or transcripts
made by PSS will be destroyed in accordance with PSS’s normal practice.
Consequently, the Client should not rely on such recordings or transcripts being available.
5. MARGINS, COLLATERAL, PAYMENTS AND DELIVERY
5.1. The Client shall pay to PSS on demand:
a. such sums of money by way of deposits, or as initial or variation margin, as PSS may require. In the case of a
Contract effected by PSS on an exchange, such margin shall be not less than the amount or percentage stipulated
by the relevant exchange plus any additional margin that PSS may, in its entire discretion, require;
b. such sums of money as may from time to time be due to PSS under a Contract and such sums as may be required in
or towards clearance of any debit balance on any Account; and
c. such sums of money as PSS may from time to time require as security for the Client’s obligations toPSS.
5.2. If the Client makes any payment which is subject to any withholding or deduction, the Client shall pay to PSS such additional
amount to ensure that the amount actually received by PSS will equal the full amount PSS would have received had no
withholding or deduction been made.
5.3. Payments into the Client’s Account are deposited by PSS on the condition that PSS receives the amounts in question.
This shall apply irrespective of whether it has been explicitly stated in receipts or other notices of, or requests for,
5.4. With the prior written agreement of PSS on each occasion, the Client may, in lieu of cash, deposit Collateral with PSS or provide
PSS with a guarantee or indemnity from a person, in a form acceptable to PSS, for the purpose of complying with its obligations.
The Client is specifically made aware that PSS may, in its entire discretion, determine the value by which Collateral shall be
registered and consequently, the amount that Collateral contributes to PSS’s demand on the Client. PSS may change such value
of Collateral without prior notice to theClient.
5.5. Any Collateral will be held by an intermediate broker or eligible custodian, appointed by PSS, and the intermediate broker or
eligible custodian shall be responsible for claiming and receiving all interest payments, income and other rights accruing to
the Client. PSS accepts no responsibility whatsoever for the acts or omissions of any intermediate broker or eligible
custodian and shall not be liable to the Client for any losses resulting, directly or indirectly, from acts or omissions of such
intermediate broker or eligible custodian.
5.6. PSS is entitled to:
a. pass on any money or Collateral received from the Client in order to satisfy PSS’s obligations to any third party;
b. charge, pledge or grant any security arrangement over Collateral in order to satisfy PSS’s obligations to any third party
in which case the Collateral may or may not be registered in the Client’sname;
c. lend Collateral to any third party in which case the Collateral may or may not be registered in the Client’s name; and
d. return to the Client other than the original Collateral or type of Collateral.
PSS shall not be obliged to account to the Client for any income received by PSS as a result of carrying out any of the
activities described in this Clause 5.
5.7. The Client shall be obliged to promptly deliver any money or property deliverable by it under a Contract in accordance with
the terms of that Contract and with any instructions given by PSS for the purpose of enabling PSS to perform its obligations
under any corresponding Contract entered into between PSS and a third party.
5.8. If the Client fails to provide any margin, deposit or other sum due under the Terms in respect of any transaction, PSS may close
any open Contract, without prior notice to the Client, and apply any proceeds thereof to payment of any amounts due to PSS.
This is further regulated in Clause 16.
5.9. Subject to Clause 9.3, if the Client fails to make any payment when it falls due, the Client shall pay interest (from the due date
and until payment takes place) on the outstanding amount at the rate stated in the Commission, Charges & Margin Schedule.
5.10. The Client is advised that PSS shall have the right, in addition to any other rights it may have under the Terms, or under
Norwegian Law in general, to limit the size of the Client’s open position (net or gross) and to refuse orders to establish new
positions. Situations where PSS may exercise such rights include, but are not limited to, where:
a. PSS considers that the Client may be in possession of Inside information;
b. PSS considers that there are abnormal trading conditions; and
c. the value of the Client’s Collateral (as determined by PSS in accordance with Clause 5.4) falls below the minimum
6. MARGIN TRADES
6.1. On the date of the opening of a Margin Trade between PSS and the Client, PSS may require the Client to have margin on the
Account at least equivalent to PSS’s initial margin requirement.
PSS’s margin requirement shall apply throughout the term of the Margin Trade. It is the Client’s responsibility to ensure that
sufficient margin is available on the Account at any time. PSS may or may not notify the Client that the margin requirements are
not met. If, at any time during the term of a Margin Trade, the margin available on the Account is not sufficient to cover PSS’s
margin requirement, the Client is obliged to reduce theamount of open Margin Trades or transfer adequate funds to PSS
sufficient to meet the margin. If PSS has notified the Client that the margin requirement is not met and requests the transfer of
funds to meet the margin, such transfer must be effected and received by PSS immediately after PSS’s request. Even if the Client
effects such transfer, PSS may, at its sole discretion and without assuming any responsibility towards the Client for such action,
close one or more Margin Trades or part of a Margin Trade and/or liquidate or sell securities or other property at the Client’s
6.2. The Client is specifically made aware that the margin requirements are subject to change without notice. When a Margin Trade
has been opened, PSS is not allowed to close the Margin Trade at its discretion but only at the Client’s instruction or according
to PSS’s rights under the Terms. Consequently, if PSS considers that its risk on a Margin Trade has increased as compared to the
risk on the date of opening such Margin Trade, PSS will increase the margin requirements.
7.1. PSS will make available to the Client a Trade Confirmation in respect of each transaction or Contract entered into by PSS
with or for the Client and in respect of each open position closed by PSS for the Client. Trade Confirmations will normally
be available instantly following the execution of the transaction in accordance with Clause 7.3.
7.2. An Account Summary and Account Statement are available to the Client through the Trading Platform. The Account Summary will
normally be updated periodically during PSS’s opening hours. The Account Statement will normally be updated every Business
Day with information for the previous Business Day. By accepting the Terms, the Client agrees not to receive any Account
Summaries or Account Statements in printed form from PSS, other than upon specific request.
7.3. Any note or other communication to be provided by PSS under the Terms, including Account Statements and Trade
Confirmations, may be sent by PSS at its option to the Client in electronic form by email or by display on the Client’s Account
Summary on the Trading Platform. The Client is obliged to provide PSS with an email address for this purpose. An email
message is considered received by the Client when sent from PSS. PSS is not responsible for any delay, alteration,
redirection or any other modification the message may undergoafter
transmission from PSS. A message on the Client’s Account on the Trading Platform is considered received by the Client when
PSS has placed the message on the Trading Platform.
7.4. The Client is obliged to verify the contents of each document, including documents sent in electronic form from PSS. Such
documents shall, in the absence of manifest error, be deemed conclusive unless the Client notifies PSS in writing to the
contrary within 24 hours after having received such document. In the event that the Client believes to have entered into a
transaction or Contract which should have produced a Trade Confirmation or otherwise a posting on the Client’s Account, but
the Client has not received such confirmation, the Client must inform PSS immediately as to when the Client ought to have
received such confirmation. If the Client fails to inform PSS immediately that the Client did not receive such confirmation, the
transaction or Contract may at PSS’s absolute discretion be deemed non-existent.
7.5. By accepting the Terms, the Client consents to the fact that PSS keeps the Client’s securities in omnibus accounts
together with securities belonging to other Clients. PSS shall keep a register clearly specifying the individual Client’s right
of ownership to the securities registered. The Client accepts that such securities are not
registered with the relevant clearing institution or custodian in the Client’s name but in PSS’s name. Consequently, the Client
will not be personally entitled to compensation for errors committed by the relevant clearing institution
or custodian, if any.
8. COMMISSIONS, CHARGES AND OTHER COSTS
8.1. The Client shall be obliged to pay to PSS the commissions and charges set out in the Commission, Charges & Margin Schedule.
8.2. PSS may vary such commissions and charges without notice when changes are to the Client’s advantage, or the grounds for
changes are due to external circumstances beyond PSS’s control, namely:
a. changes in the relationship with PSS’s counterparties affect PSS’s cost structures; and
b. there are changes in commissions and charges that are ordinarily passed on to the Client by PSS, such as changes in
commissions and charges of exchanges, clearing houses, information providers or other third party providers.
8.3. PSS may vary such commissions and charges with one month’s noticeif:
a. market conditions, including competitive behavior, call for changes to PSS’s commissions;
b. PSS, for commercial reasons, wishes to change its general cost and pricing structure;or
c. significant particulars of the Client, based on which individual conditions were provided, have changed.
8.4. In addition to such commissions and charges, the Client shall be obliged to pay all applicable VAT and other taxes, storage
and delivery charges, exchange and clearing house fees and all other fees incurred by PSS in connection with any Contract
and/or in connection with maintaining the Clientrelationship.
8.5. Furthermore, PSS shall be entitled to demand that the following expenses are paid separately by theClient;
a. all extraordinary disbursements resulting from the Client relationship, e.g., telephone, telefax, courier and postal
expenses where the Client requests hardcopy Trade Confirmations, Account Statements, etc, which PSS could have
delivered in electronic form;
b. any expenses of PSS caused by non-performance by the Client, including a fee determined by PSS in relation to
forwarding of reminders, legal assistance, etc;
c. any expenses of PSS in connection with replies to inquiries by public authorities, pursuant to Norwegian legislation,
including a fee determined by PSS in relation to forwarding of transcripts and enclosures and for the preparation of
d. administration fees in connection with security deposits, and any expenses of PSS in relation to a pledge, if
provided, including any insurance premium payments; and
e. any expenses of PSS in connection with auditor’s comments/reports if such is requested by theClient.
8.6. The fees will be charged either as a fixed amount corresponding to costs incurred, or as a percentage or hourly rate
corresponding to the service performed. The methods of calculation can be combined. PSS reserves that right to introduce
8.7. PSS client accounts in which there have been no transactions (trading / withdrawals / deposits), for a set period of 6 months,
will be considered as being dormant accounts and such accounts will be charged a dormant fee of US$10 each month.
8.8. PSS may share commissions and charges with its associates, Introducing Brokers or other third parties or receive remuneration
from them in respect of Contracts entered into by PSS. Details of any such remuneration or sharing arrangement will not be set
out on the relevant Trade Confirmation. PSS (or any associate) may benefit from commission, mark-up, mark-down or any other
remuneration where it acts on behalf of the Counterparty to a Contract.
8.9. Unless specified otherwise in the Terms, all amounts due to PSS (or Agents used by PSS) under the Terms shall, at PSS’s option;
8.10. In respect of any transactions to be effected OTC, PSS shall be entitled to quote prices at which it is prepared to trade with the
Client. Save where PSS exercises any rights it may have under the Terms to close a Contract, it is the Client’s responsibility to
decide whether or not it wishes to enter into a Contract at such prices. The prices quoted on Trade Confirmations sent to the
Client will be inclusive of any charges, which will not be separately identified and disclosed. The Client agrees to receive Trade
Confirmations in this form. Additional charges may apply. PSS’s actions as market maker are further described in Clause 12.
8.11. Furthermore, the Client acknowledges, recognizes and accepts that the procedures described in Clause 9 (Interest and
Currency Conversions) and Clause 12 (Market Making) may result in additional costs to theClient.
9. INTEREST AND CURRENCY CONVERSIONS
9.1. Subject to Clause 9.2 below and save as otherwise agreed in writing, PSS shall not be liable to:
a. pay interest to the Client on any credit balance in any account or on any other sum held by PSS;or
b. account to the Client for any interest received by PSS on such sums or in connection with anyContract.
9.2. If the net free equity of an Account exceeds certain amounts then PSS will pay interest at such rates as published in PSS’s
Commission, Charges & Margin Schedule.
9.3. If there is a negative net free equity on an Account, the Client will pay interest to PSS on the full amount of that negative net
free equity at such rate as published in PSS’s Commission, Charges & MarginSchedule.
9.4. PSS may vary such interest rates without notice when changes are to the Client’s advantage, or the grounds for changes are due
to external circumstances beyond PSS’s control, namely:
a. changes in the monetary or credit policies domestic or abroad affect the general interest level in a way that is of
importance to PSS;
b. other developments occur in the general interest rate level, including in the money and bond markets, in a way that is
of importance to PSS; and
c. changes in the relationship with PSS’s Counterparties affect PSS’s coststructures.
9.5. PSS may vary such interest rates with one month’s notice if:
a. market conditions, including competitive behavior, call for changes to PSS’s conditions;
b. PSS, for commercial reasons, wishes to change its general cost and pricing structure; and
c. significant particulars of the Client, based on which individual conditions were provided, have changed.
9.6. PSS is entitled to (but shall not in any circumstances be obliged to) convert:
a. any realized gains, losses, option premiums, commissions, interest charges and brokerage fees which arise in a
currency other than Client’s base currency (i.e. the currency in which the Client’s Account is denominated) to
the Client’s base currency;
b. any cash currency deposit to another cash currency deposit for the purpose of purchasing an asset denominated
in a currency other than the Client’s base currency; and
c. any monies held by PSS for the Client into such other currency as PSS considers necessary or desirable to cover the
Client’s obligations and liabilities in that currency.
9.7. Whenever PSS conducts currency conversions, PSS will do so at such reasonable rate of exchange as PSS shall select. PSS shall
be entitled to charge and retain for its own account a mark-up on the exchange rates for arranging such conversion as PSS
may from time to time specify and publish in the Commission, Charges & Margin Schedule.
10.1. Any and all Collateral transferred to PSS by the Client or held by PSS or by PSS’s Counterparties on behalf of the Client is pledged
as a security for any liability that the Client may have, now or in the future, to PSS. Without limitation, such Collateral shall
comprise the credit balances on Accounts, the securities registered as belonging to the Client on PSS.
10.2. If the Client fails to fulfill any obligation under the Terms, PSS is entitled to sell any pledged Collateral immediately without
any notice or court action. Such sale shall take place by the means that PSS, in its reasonable discretion, determines and at
the price that PSS, in its reasonable discretion, determines to be the best obtainable price.
11. NETTING AGREEMENT
11.1. If on any date the same amounts are payable under the Terms by each party to the other in the same currency, then, on such
date, each party’s obligations to make payment of any such amount will be automatically satisfied and discharged. If the
amounts are not in the same currency, the amounts will be converted by PSS in accordance with the principles referred to in
11.2. If the aggregate amount that is payable by one party exceeds the aggregate amount that is payable by the other party, then the
party by whom the larger aggregate amount is payable shall pay the excess to the other party and the obligations of each party
to make payment will be satisfied anddischarged.
11.3. If the Client relationship is terminated according to Clause 16, the claims that the parties have against each other shall be finally
discharged by means of netting (closed). The value of open Contracts shall be determined according to the principles set forth
below in Clauses 11.4 to 11.7 inclusive and the final amount to be paid by one of the parties shall be the difference between the
payment obligations of the parties.
11.4. The rates based on which the Contracts shall be closed shall be the market rates applicable on the day on which PSS decides to
close the Contracts due to the Event of Default.
11.5. PSS may, at its reasonable discretion, determine the rates by obtaining an offer from a market maker in the asset in question or
by applying rates from electronic financial information systems.
11.6. When determining the value of the Contracts to be netted, PSS shall apply its usual spreads and include all costs and other
11.7. This netting agreement shall have legal effect towards an estate and creditors of the parties to the Client relationship.
12.1. When PSS executes orders as Agent for the Client on a recognized stock or futures exchange, PSS will not be a party to such a
trade, as such, orders will be executed in the trading system of the relevant exchange at the best price and the most favorable
conditions available at the time of the order or according to the Client’s specific instructions, e.g., in a situation where the Client
has chosen to limit the order, PSS will not include any additional spread in the price of the execution achieved for the Client but
will be remunerated according to the Commission, Charges & Margin Schedule.
12.2. The Client is specifically made aware that in certain markets, including, but not necessarily limited to, foreign exchange
markets, OTC foreign exchange options and CFD Contracts, PSS may act as a marketmaker.
12.3. PSS will, upon the Client’s written request, disclose to the Client whether PSS may act as a market maker in a certain
12.4. When acting as a market maker, PSS will, under normal market circumstances, quote the Client bid and ask prices.
12.5. In order for PSS to quote prices with the swiftness normally associated with speculative trading, PSS may have to rely on
available price or availability information that may later prove to be faulty due to specific market circumstances, for instance,
but not limited to, lack of liquidity in or suspension of an asset or errors in feeds from information providers or quotes from
Counterparties. If so, and if PSS has acted in good faith when providing the price to the Client, PSS may cancel the trade with the
Client but shall do so within a reasonable time and shall provide the Client with a full explanation for the reason for such
12.6. Following execution of any position with a Client, PSS may, at its sole discretion, subsequently offset such Client position with
another Client position, or a position with one of PSS’s Counterparties or retain a proprietary position in the market with the
intention to obtain trading profits from such positions. Such decisions and actions may therefore result in PSS offsetting Client
positions at prices different from prices quoted to the Client, resulting in trading profits or losses for PSS. This in turn can raise the
possibility of the Client incurring what may be seen as an implied cost (i.e. the difference between the price at which the Client
traded with PSS and the price at which PSS subsequently traded with Counterparties and/or other clients) due to any profits
realized by PSS as a result of the market making function. However, the market making function may involve significant costs to
PSS if the market moves against PSS as compared to the price at which PSS traded with the Client.
12.7. As a result of PSS’s activity as a market maker, the Client accepts that PSS has no obligation to provide the Client with best
execution in such markets. Furthermore, the Client accepts that PSS in such markets may hold positions that are contrary to
positions of the Client, resulting in potential conflicts of interest between PSS and the Client.
12.8. In markets where PSS acts as a market maker, PSS may or may not charge commissions. However, irrespective of whether or
not PSS charges any commissions, the Client accepts that PSS will seek to make additional profits out of its performance as a
market maker and the size of any such profits may be considerable if and when compared with the Client’s margin deposit.
12.9. The Client acknowledges, recognizes and accepts that the price quoted to the Client includes a spread when compared with the
price to which PSS may have covered or expected to be able to cover the Contract in a trade with another client or a
Counterparty. Furthermore, the Client acknowledges, recognizes and accepts that the said spread constitutes remuneration to
PSS and that such spread cannot be calculated as far as all Contracts are concerned and that such spread will not be specified in
the Trade Confirmation or otherwise revealed tothe
12.10. Any commission costs, interest charges, costs associated with and included in the spread quoted by PSS as a market maker in
certain markets and other fees and charges will consequently influence the Client’s trading result and will have a negative effect
on the Client’s trading performance compared to a situation ifsuch commission costs, interest charges, costs associated with and
included in the spreads did not apply.
12.11. Whilst dealing spreads and commissions are normally considered moderate seen in relation to the value of the underlying
assets traded, such costs may be considerable when compared with the Client’s margin deposit. It is a consequence thereof
that the Client’s margin deposit may be depleted by trading losses that the Client may incur and by the directly visible dealing
costs such as commissions, interest charges and brokerage fees, as well as by the said not visible costs for the Client caused by
PSS’s performance as a marketmaker.
12.12. If the Client is an active trader and is undertaking numerous transactions, the total impact of visible, as well as not visible costs,
may be significant. Consequently, the Client may have to obtain significant profits in the markets in order to cover the costs
associated with trading activities with PSS. For very active traders, such costs may, over time, exceed the value of the margin
deposited. Normally, when trading margined derivatives, thelower
the percentage of the applicable margin rate, the higher the proportion of the costs associated with executing a transaction.
12.13. The Client is specifically made aware that in the area of market making in foreign exchange, OTC foreign exchange options,
CFD Contracts and other OTC products, substantial implied costs can arise as a consequence of the profits made by PSS
performing in its capacity as a marketmaker.
12.14. PSS’s performance as a market maker may negatively affect the Client’s Account with PSS and the said implied costs are neither
directly visible nor directly quantifiable for the Client at any time.
12.15. PSS is at no time under any obligation to, nor will PSS at any time disclose, any details of its performance or income
produced as a market maker or details related to other commissions, charges and fees.
12.16. The Client isspecifically made aware that CFD Contracts may be OTC products quoted by PSS whilst operating as a marker
maker and not traded on a recognized stock exchange. As a result, the description above of the implied, not visible costs
related to PSS’s performance as a market maker may also apply to any CFDContract.
13. AGGREGATION AND SPLIT
13.1. The Client’s orders may, at the discretion of PSS, be aggregated with PSS’s own orders, orders of any of PSS’s associates
and/or persons connected with PSS (including employees and other clients). Furthermore, PSS may split the Client’s orders, as
well as aggregated orders, when executing such orders. Although orders will only be aggregated or split where PSS reasonably
believes it to be in the overall best interests of its clients, aggregation and splitting may on some occasions result in the Client
obtaining a less favorable price than if the Client’s orders had been executed separately or mutually.
14. CONFLICTS OF INTEREST
14.1. PSS, its associates or other persons connected with PSS may have an interest, relationship or arrangement that is material in
relation to any transaction or Contract effected, or advice provided by PSS, under the Terms. By accepting the Terms, the Client
agrees that PSS may transact such business without prior reference to theClient.
14.2. In addition, PSS may provide advice, recommendations and other services to third parties whose interests may be in conflict or
competition with the Client’s interests, and PSS, its associates and the employees of any of them may act on behalf of other
clients who may take positions opposite to the Client or may be in competition with the Client to acquire the same or a similar
15. COUNTERPARTIES AND INTRODUCING BROKERS
15.1. PSS may instruct a Counterparty, selected at PSS’s discretion, to give effect to the Client’s instructions, and PSS shall so instruct a
Counterparty where the transaction is to be subject to the rules of an exchange or market of which PSS is not a member.
15.2. PSS shall not be responsible for errors committed by any such Counterparty unless it is proven that PSS did not acted with
sufficient care when selecting the Counterparty.
15.3. The Client may have been referred to PSS by an Introducing Broker. If so, PSS shall not be responsible for any agreement made
between the Client and the Introducing Broker and to which PSS is not aparty.
15.4. The Client isspecifically made aware that the Client’s agreement with the Introducing Broker may result in additional costs to
the Client as PSS may pay fees or commission to such person. The Client acknowledges that any such Introducing Broker will
either be acting as an independent intermediary or an Agent for the Client and that no such persons shall be authorized to
make any representations concerning PSS or theServices.
16. DEFAULT AND DEFAULT REMEDIES .
16.1. PSS reserves the right to retain, or make deductions from, any amounts which PSS owes to or is holding for the Client if any
amounts are due from the Client to PSS or its associates.
16.2. The Client authorizes PSS, at PSS’s discretion, at any time and without notice or liability to the Client, to sell, apply, set-off
and/or charge in any manner any or all of the Client’s property and/or the proceeds of any of the same of which PSS or any of
its associates or Agents has custody or control, in order to discard any or all of the Client’s obligations to PSS or to PSS’s
16.3. Each and any of the following events shall constitute an Event ofDefault:
a. if the Client fails to make any payment or fails to do any other act or thing required under the Terms or by PSS, at its
b. if the Client fails to remit funds necessary to enable PSS to take delivery under any Contact on the first due date;
c. if the Client fails to provide assets for delivery, or take delivery of assets, under any Contract on the first due date;
d. if the Client dies or becomes of unsound mind;
e. if an application is made in respect of the Client for any action pursuant to the Norwegian Bankruptcy Act or any
equivalent act applicable to the Client or, if a partnership, such an application is made in respect of one or more of
the partners, or if a company, a receiver, trustee, administrative receiver or similar officer is appointed;
f. if a petition is presented for the winding-up or administration of the Client;
g. if an order is made or a resolution is passed for the winding-up or administration of the Client (other than for the
purposes of amalgamation or reconstruction with the prior written approval of PSS);
h. if any distress, execution or other process is levied against any property of the Client and is not removed,
discharged or paid within seven days;
i. if any security created by any mortgage or charge becomes enforceable against the Client and the mortgagee or
charge takes steps to enforce the mortgage or charge;
j. if any indebtedness of the Client or any of itssubsidiaries becomes immediately due and payable, or capable
of being declared so due and payable, prior to its stated maturity by reason of default of the Client (or any of
its subsidiaries) or the Client (or any of its subsidiaries) fails to discharge any indebtedness on its due date;
k. if the Client fails to fully comply with any obligations under the Terms or anyContract;
l. if any of the representations or warranties given by the Client are, or become, untrue;
m. if PSS or the Client is requested to close a Contract (or any part of a Contract) by any regulatory agency or authority; or
n. an event occurs, or circumstances arise such that PSS reasonably considers it necessary for its own protection or
the protection of its associates that an Event of Default be held toexist.
16.4. Upon the existence of an Event of Default, PSS shall be entitled to, and is authorized, at its discretion:
a. to sell or charge in any way any or all of the Client’s Collateral, assets and property which may from time to time be
in the possession or control of PSS or any of its associates or Agents or call on any guarantee;
b. to buy any Collateral, investment or other property where this is, or is in the reasonable opinion of PSS likely to be,
necessary in order for PSS to fulfill its obligations under any Contract and the Client shall reimburse PSS for the full
amount of the purchase price plus any associated costs and expenses;
c. to deliver any Collateral investment or property to any third party, or otherwise take any action PSS considers to
be desirable in order to close any Contract;
d. to require the Client immediately to close and settle a Contract in such manner as PSS may, in its sole discretion,
e. to enter into any foreign exchange transaction, at such rates and times as PSS may determine, in order to meet
obligations incurred under a Contract;
f. to re-invoice all or part of any assets standing to the debit or credit of any Account (including commuting PSS’s or the
Client’s obligation to deliver an asset into an obligation to pay an amount equal to the market value of the asset
(determined by PSS in its sole discretion) on the date re-invoicing takes place).
16.5. The Client authorizes PSS to take any or all of the steps described in this Clause 16 without notice to the Client and
acknowledges that PSS shall not be responsible for any consequences of it taking any such steps. The Client shall execute
such documents and take such other action as PSS may request in order to protect the rights of PSS and it associates under
the Terms or under any agreement the Client may have with any ofthem.
16.6. If PSS exercises its rights to sell any Collateral or property of the Client under this Clause 16, it will effect such sale, without
notice or liability to the Client, on behalf of the Client and apply the proceeds of sale in or towards discharge of any or all of the
Client’s obligations to PSS and/or to PSS’s associates.
17. CLIENT WARRANTIES & REPRESENTATIONS
17.1. The Client warrants and represents to PSS that:
a. it is not under any legal disability with respect to, and is not subject to any law or regulation which prevents
its performance according to the Terms or any Contract or transaction contemplated by the Terms;
b. it has obtained all necessary consents and has the authority to operate according to the Terms (and if the Client is
not an individual person, it is properly empowered and has obtained necessary corporate or other authority
pursuant to its constitutional and organizational document);
c. investments or other property supplied by the Client for any purpose shall, subject to the Terms, at all times be
free from any charge, lien, pledge or encumbrance and shall be beneficially owned by the Client;
d. it is in compliance with all law to which it is subject including, without limitation, all tax laws and regulations,
exchange control requirements and registration requirements; and
e. the information provided by the Client to PSS is complete, accurate and not misleading in any material respect.
17.2. The above warranties and representations shall be deemed to be repeated each time the Client provides instructions to
PSS in the future for the duration of the Clientrelationship.
17.3. The Client is obliged to inform PSS immediately should the foundation of any warranty or representation or information
previously given change.
18. INDEMNITY AND LIMITATION OFLIABILITY
18.1. The Client shall indemnify PSS and keep PSS indemnified against all losses, taxes, expenses, costs and liabilities whatsoever
(present, future, contingent or otherwise and including reasonable legal fees) which may be suffered or incurred by PSS as a
result of or in connection with:
a. the client’s breach of the Terms;
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b. PSS entering into any transaction or Contract; or
c. PSS taking any of the steps which PSS is entitled to take in an Event of Default; unless and to the extent only that such
losses, taxes, expenses, costs and liabilities are suffered or incurred as a result of PSS’s gross negligence or willful
18.2. This indemnity shall survive any termination of the Client relationship.
18.3. PSS shall not be liable for:
a. any loss (including consequential and other indirect losses), expense, cost or liability (together referred to as “Loss”)
suffered or incurred by the Client as a result of or in connection with the provision of the Services unless and to the
extent only that such Loss is suffered or incurred as a result of PSS’s gross negligence or willful default;
b. any consequential or other indirect loss suffered or incurred by the Client whether arising from PSS’s negligence or
c. any Loss suffered or incurred by the Client as a result of any third party (including any Counterparty to, or any person
whom PSS engages in connection with, a Contract) failing to perform its obligations to PSS and, in such circumstances,
PSS shall not be liable to perform its obligations to the Client to the extent that it is unable to do so as a result of the
third party’s default.
18.4. The Client acknowledges, recognizes and accepts that any market recommendation and any information communicated by PSS
does not constitute an offer to buy or sell a Contract and that such recommendation and information, although based upon
information from sources believed by PSS to be reliable, may be based solely on a broker’s opinion and that such information
may be incomplete and may be unverified and unverifiable. PSS makes no representation, warranty or guarantee as to, and
shall not be responsible for, the accuracy or completeness of any such recommendation or information furnished to the Client.
19. CONFIDENTIALITY AND DISCLOSURE OF INFORMATION
19.1. Neither party shall disclose to any person (unless required to do so by any applicable law or by any regulatory or supervisory
authority or by any other person entitled by law to require disclosure, or to enable it properly to perform its obligations under
the Terms) any information relating to the business, investment, finances or other matters of a
confidential nature of the other party of which it may in the course of its duties or otherwise become possessed, and each party
shall use all reasonable endeavors to prevent any such disclosure.
19.2. By accepting the Terms, the Client authorizes PSS to disclose such information relating to the Client as may be required by
any law, rule or regulatory authority, including any applicable Market Rules, without prior notice to the Client.
20.1. PSS is entitled to amend the Terms at any time by giving at least 30 days’ notice, including but not limited to notice given by
e-mail, to the Client. Such changes shall become effective on the date specified in thenotice.
21.1. The Client relationship shall remain in force until terminated.
21.2. Either party is entitled to terminate the Client relationship immediately by giving written notice to the other party. No penalty
shall be payable by either party on termination of the Client relationship. Termination shall not affect any accrued rights and
21.3. On termination, each of PSS and the Client undertakes to complete all Contracts that are already in progress and the Terms
shall continue to bind both parties in relation to such transactions. PSS is entitled to deduct all amounts due to it before
transferring any credit balances on any Account to the Client and it is entitled to postponesuch transferring until any or all
Contracts between PSS and the Client are closed. Furthermore, PSS is entitled to require the Client to pay any charges incurred
in transferring the Client’s investments.
21.4. At any time after the termination of the Client relationship, PSS is entitled, without notice, to close any Contract between PSS
and the Client.
22. CLIENT FUND SAFETY
22.1. Funds deposited by clients are segregated from the company’s bank account and are kept in a separate bank account.
22.2. PSS monitors clients’ transactions using an automated system to reduce the risk of depleting balances below the level of initial
deposits, keeping them away from any losses beyond the original value of investment.
23. COMPLAINTS ANDDISPUTES
23.1. In the event the Client has a complaint against PSS, the Client is obliged to advise PSS’s Legal Department of the complaint in
writing. PSS is thereafter obliged to investigate the complaint promptly and fully.
23.2. Without prejudice to any of PSS’s other rights under the Terms, in any case when the Client and PSS are in dispute over a Margin
Trade or alleged Margin Trade or any instruction relating to a Margin Trade, PSS is entitled, at its sole discretion and without
notice, to close any such Margin Trade or alleged Margin Trade, if PSS reasonably believes such action to be desirable for the
purpose of limiting the maximum amount involved in the dispute. PSS shall not be responsible for, or under any obligation to the
Client in connection with, any subsequent fluctuations in the level of the relevant Margin Trade. If PSS closes a Margin Trade
under this Clause 23.3, such action shall be without prejudice to PSS’s right to contend that such Margin Trade had already been
closed by PSS or was never opened by the Client. PSS shall take reasonable steps to inform the Client that PSS has taken such
action as soon as practicable after doing so. Where PSS closes a Margin Trade or alleged Margin Trade
in accordance with this Clause 23.3, the closing shall be without prejudice to the Client’s rights to open a new Margin Trade,
provided that such new Margin Trade is opened in accordance with the Terms. When calculating the margin or other funds
required for such new Margin Trade, PSS is entitled to do so on the basis that PSS’s view of the disputed events or
instructions is correct.
24. GOVERNING LAW AND CHOICE OF JURISDICTION
24.1. The Client relationship and the Terms are subject to and shall be constructed in accordance with Norwegian regulation as the
sole and exclusive governing law.
24.2. The Client and PSS have agreed that Oslo District Court shall have exclusive jurisdiction and be the sole and exclusive venue in
disputes regarding the Client relationship and the Terms and any and all dealings between the Client and PSS. However, PSS
reserves the right to commence proceedings in any competent court and jurisdiction that it may find suitable, including but not
limited to jurisdictions in which the Client is a citizen or resident and jurisdictions in which the Client possesses assets.
24.3. This Clause 24 shall survive any termination of the Clientrelationship.
25.1. If at any time any provision of the Terms is or becomes illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the remaining provisions of the Terms under the law of that
jurisdiction nor the legality, validity or enforceability of such provision under the law of any other jurisdiction shall be in any way
25.2. PSS shall not be liable to the Client for any failure, hindrance or delay in performing its obligations under the Terms
where such failure, hindrance or delay arises directly or indirectly from circumstances beyond its reasonable control.
Such force majeure events shall include, without limitation, any technical difficulties such as telecommunications failure
or disruptions (e.g., due to maintenance downtime), declared or imminentwar,
revolt, civil unrest, catastrophes of nature, statutory provisions, measures taken by authorities, strikes, lock-outs, boycotts, or
blockades, notwithstanding that PSS is a party to the conflict and including cases where only part of PSS’s functions are affected
by such events.
25.3. Furthermore, PSS is entitled, in its reasonable opinion, to determine that an emergency or an exceptional market condition exists
that may also account for any failure, hindrance or delay in performing its obligationsunder
the Terms. Such conditions shall include, without limitation, the suspension or closure of any market or the abandonment or
failure of any event to which PSS relates its quote or the occurrence of an excessive movement in the level of any Margin Trade
and/or underlying market or PSS’s reasonable anticipation of the occurrence of such a movement. In such cases, PSS may
increase its margin requirements, close any or all of the Client’s open Margin Trades and/or suspend or modify the application of
all or any of the Terms, including but not limited to, altering the last time for trading a particular Margin Trade, to the extent that
the condition makes it impossible or impracticable for PSS to comply with the term in question.
25.4. The Client may not assign any of the Client’s rights or delegate any of the Client’s obligations under the Terms or according to any
Contract to any person. PSS may assign its rights or delegate its obligations under the Terms or according to any Contract to any
regulated financial institution.
25.5. With respect to various investments, instruments and groups of clients, PSS may provide additional business terms. The
Client acknowledges, understands and accepts that:
a. such business terms made available to clients shall constitute an addition to Terms; and
b. the Client should not undertake any transaction unless the business terms applicable for such investments
have been understood and accepted by theClient.
By entering into a transaction and thereby accepting the terms of such transaction, the Client will be deemed to
have understood and accepted the terms of such transaction, notwithstanding sub-clause b. above.
25.6. The rights and remedies contained in the Terms are cumulative and not exclusive of any rights or remedies provided by
25.7. No delay or omission on the part of PSS in exercising any right, power or remedy provided by law or under the Terms, or
partial or defective exercise thereof, shall:
a. impair or prevent further or other exercise of such right, power or remedy; or
b. operate as a waiver of such right, power or remedy.
25.8. No waiver of any breach of any clause in the Terms shall (unless expressly agreed in writing by the waiving party) be construed as
a waiver of a future breach of the same clause or as authorizing the continuation of the particular breach.
25.9. The Client hereby ratifies all transactions with PSS effected prior to the Client’s acceptance of the Terms and agrees that the
rights and obligations of the Client in respect thereto shall be governed by theTerms.
25.10. By accepting the Terms on behalf of a body corporate or other legal entity, the person signing represents and warrants that he or
she is authorized to act on behalf of such body corporate or legal entity and to bind the same to the Terms and all obligations
arising hereunder. If at a later stage it becomes apparent that the signatory was not duly authorized to bind the body corporate
or legal entity, PSS will have the right to seek restitutionfrom
this person. Furthermore, the signatory shall indemnify PSS against all liabilities, losses, damages, costs, and expenses in
relation to any claims or actions brought against PSS as a result of the signatory holding out to be authorized to act and bind
any such body corporate or legal entity.
25.11. Client shall be able to communicate with PSS in English or any other language as PSS may offer from time to time.
25.12. PSS or third parties may have provided the Client with translations of the Terms. The original English versions shall be the only
legally binding versions for the Client and PSS. In case of discrepancies between the original English versions and other
translationsin the Client’s possession, the original English versions provided by PSS shall prevail.
Risk Disclosure Statement for Foreign Exchange, CFD’s, Futures and Options
This brief statement does not disclose all of the risks and other significant aspects of trading foreign exchange, contracts for
difference (CFD’s), futures and options. In light of the risks, you should undertake such transactions only if you understand the
nature of the contracts (and contractual relationship) into which you are entering and the extent of your exposure to risk.
Trading in foreign exchange, CFD’s, futures and options is not suitable for many members of the public. You should carefully
consider whether trading is appropriate for you in light of your experience, objectives, financial resources and other relevant
FOREIGN EXCHANGE, CFDs ANDFUTURES
1. Effect of “Leverage” or “Gearing”
Transactions in foreign exchange, CFD’s and futures carry a high degree of risk. The amount of initial margin is small relative to the
value of the foreign exchange, CFD’s or futures contract so that transactions are “leveraged” or “geared”.
A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to
deposit: this may work against you as well as for you. You may sustain a total loss of initial margin funds and any additional
funds deposited with the firm to maintain your position or margin levels and you may be called upon to pay substantial
additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds within the
time prescribed, your position may be liquidated at a loss and you will be liable for any resulting deficit.
2. Risk-Reducing orders or strategies
The placing of certain orders (e.g., “stop-loss” orders, where permitted under local law, or “stop-limit” orders), which are
intended to limit losses to certain amounts, may not be effective because market conditions make it impossible to execute
such orders. Strategies using combinations of positions, such as “spread” and “straddle” positions, may be as risky as taking
simple “long” or “short” positions.
3. Variable degree of risk
Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type
of options (i.e. put or call) which they contemplate trading and the associated risks. You should calculate the extent to which the
value of the options must increase for your position to become profitable, taking into account the premium and all transaction
The purchaser of options may offset or exercise the options or allow the options to expire. The exercise of an option results
either in a cash settlement or in the purchaser acquiring or delivering the underlying interest. If the option is on a future, the
purchaser will acquire a futures position with associated liabilities for margin (see the section on Foreign Exchange, CFD’s and
Futures above). If the purchased option expires worthless, you will suffer a total loss of your investment, which will consist of
the option premium plus transaction costs. If you are contemplating purchasing deep- out-of-the-money options, the
probability of those options becoming profitable is ordinarily remote.
Selling (“writing” or “granting”) an option generally entails considerably greater risk than purchasing options. Although the
premium received by the seller is fixed, the seller may sustain a loss well in excess of that amount. The seller will be liable for
additional margin to maintain the position if the market moves unfavorably. The seller will also be exposed to the risk of the
purchaser exercising the option and the seller will be obligated to either settle the option in cash or to acquire or deliver the
underlying interest. If the option is in a future there are associated liabilities for margin (see the section on Foreign Exchange,
CFD’s and Futures above). If the option is “covered” by the seller holding a corresponding position in the underlying interest or a
future or another option, the risk may be reduced. If the option is not covered, the risk of loss can be unlimited.
Certain exchanges in some jurisdictions permit deferred payment of the option premium, exposing the purchaser
to liability of margin payments not exceeding the amount of the premium. The purchaser is still subject to the risk of losing
the premium and transaction costs. When the option is exercised or expires, the purchaser is responsible for any unpaid
premium outstanding at that time.
ADDITIONAL COMMON RISKS
4. Terms and Conditions of Contracts
You should ask the firm with which you deal about the terms and conditions of the specific futures or options which you are
trading and associated obligations (e.g., the circumstances under which you may become obligated to make or take delivery of the
underlying interest of a futures contract and, in respect of options, expiration dates and restrictions on the time for exercise).
Under certain circumstances the specifications of outstanding contracts (including the exercise price of an option) may be
modified by the exchange or clearing house to reflect changes in the underlying interest.
5. Suspension or Restriction of Trading and Pricing Relationships
Market condition (e.g., illiquidity) and/or the operation of the rules of certain markets (e.g., the suspension of trading in any
contract month because of price limits or “circuit breakers”) may increase the risk of loss by making it difficult or impossible to
effect transactions or liquidate/offset positions. If you have sold options, this may increase the risk of loss. Further, normal pricing
relationships between the underlying interest and the future,
and the underlying interest and the option may not exist. This can occur when, for example, the futures contract underlying
the option is subject to price limits when the option is not. The absence of an underlying reference price may make it
difficult to judge “fair” value.
6. Deposited Cash and Property
You should familiarize yourself with the protections accorded money or other property you deposit for domestic and foreign
transactions, particularly in the event of a firm insolvency or bankruptcy. The extent to which you may recover your money or
property may be governed by specific legislation or local rules. In some jurisdictions, property which had been specifically
identifiable as your own will be pro-rated in the same manner as cash for purposes of distribution in the event of a shortfall.
7. Commission and Other Charges
Before you begin to trade, you should obtain a clear explanation for all commission, fees and other charges for which you
will be liable. These charges will affect your net profit (if any) or increase yourloss.
8. Transactions in Other Jurisdictions
Transactions on markets in other jurisdictions, including markets formally linked to a domestic market, may expose you to
additional risk. Such markets may be subject to regulation, which may offer different or diminished investor protection. Your
local regulatory authority will be unable to compel the enforcement of the rules of regulatory authorities or markets in other
jurisdictions where your transactions have been effected.
9. Currency Risks
The profit or loss in transactions in foreign currency-denominated contracts (whether they are traded in your own or another
jurisdiction) will be affected by fluctuations in currency denomination of the contract to another currency.
10. Trading Facilities
Most open-outcry and electronic trading facilities are supported by computer-based component systems for the orderrouting,
execution, matching, registration or clearing of trades. As with all facilities and systems, they are vulnerable to
temporary disruption or failure. Your ability to recover certain losses may be subject to limits on liability imposed by the
system provider, the market, the clearing house and/or member firms. Such limits may vary: you should ask the firm with
which you deal for details in this respect.
11. Electronic Trading
Trading on an electronic trading system may differ not only from trading in an open-outcry market but also from trading on
other electronic trading systems. You will be exposed to risks associated with the system including the failure of hardware and
software. The result of any system failure may be that your order is either not executed according to your instructions or is not
executed at all.
12. Off-Exchange Transactions
In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect off-exchange transactions. The firm
with which you deal may be acting as your counterpart to the transaction. It may be difficult or impossible to liquidate an existing
position, to assess the value, to determine a fair price or to assess the exposure to risk. For these reasons, these transactions may
involve increased risks. Off-exchange transactions may be less regulated or subject to a separate regulatory regime. Before you
undertake such transactions, you should familiarize yourself with applicable rules and attendant risks.