Disclaimer

Solomon JFZ (Asia) Holdings Limited 華贏東方(亞洲)控股有限公司 (CE No. BIF 175)

 

Room 1910-1912A, Tower 3, China Hong Kong City, 33 Canton Road, Tsim Sha Tsui, Kowloon, Hong Kong

Effective from 18 August 2022

 

 

 

Section 1 - Client Agreement for Cash Accounts

Section 2 - Client Agreement for Margin Accounts

Appendix 1 - Personal Information Collection Statement

Appendix 2 - Risk Disclosure Statement

Appendix 3 - Electronic Service Agreement

 

Section 1 - Client Agreement for Cash Accounts

 

 

1. Definitions

 

1.1 In these Terms, the following expressions, unless the context requires otherwise, shall have the following meanings:：

 

“Account” means any securities trading account now or hereafter opened in the name of the Client with the Company in accordance with this Agreement.

 

“Account Opening Form” means the form containing the name, address and other details of, and signed by the Client including the notes and statements or any amendments thereto.

 

“Agreement” means this Agreement and the Appendices attached hereto as well as other written agreements in connection with the opening, maintenance and operation by the Client of the Accounts with the Company, including but not limited to the Account Opening Form as originally executed or thereafter amended or supplemented from time to time.

 

“Authorized Person” means the person is authorized by the Client to give instructions in connection with the Account(s) and Transaction(s) on the Client’s behalf or any one of them.

 

“Business Agent” means the agent acting on behalf of the Company for trading or clearing in Hong Kong or elsewhere,  including any member of the Exchange or the Clearing House.

 

“Business Day” means any date on which the relevant exchanges open for trade other than Saturdays, Sundays, public holidays and any other non-trading days declared by the relevant exchanges.

 

“Clearing House” in relation to the SEHK, means the HKSCC and its successor or assignee; in relation to any other Foreign Stock Exchange, means the clearing house providing services similar to those of the HKSCC to such Foreign Stock Exchange and its successor or assignee.

 

“Client” means the person or persons in relation to whom the Company agrees to open and maintain one or more accounts and its/his or their name or names in accordance with the terms of this Agreement, and when the Client/Clients is/are : (i) an individual/individuals, the term shall include a Client/Clients himself/themselves and his/their executor(s) and administrator(s); (ii) a sole proprietorship, the term shall include the sole proprietor itself and its executor and administrator as well as its successor in the business; (iii) a partnership, the term shall include the partners themselves and their respective executors and administrators during the time when the Client maintains the aforesaid Account(s) , and shall also include any partner(s) who join(s) the partnership any time in the future (whether or not he quits subsequently) and their respective executors and administrators as well as the successor in the business of the partnership and (iv) a corporation, including the corporation itself and its successor.

 

“Exchange” means the SEHK and/or any Foreign Stock Exchange (as the case may be)

 

“Electronic Services” means the services specified in the “Electronic Service Agreement”

 

“Financial Product” means any securities, futures contracts or leveraged foreign exchange contracts as defined under the Securities and Futures Ordinance.

 

“Foreign Stock Exchange” means a stock exchange whose operation is permitted under the laws of a country or territory outside Hong Kong, or any over-the-counter (OTC) market.

 

“Hong Kong” means the Hong Kong Special Administrative Region of the People’s Republic of China.

 

“Hong Kong Regulators” means the SEHK, the SFC and/or any other regulators in Hong Kong having jurisdiction over securities transactions.

 

“HKSCC”means The Hong Kong Securities Clearing Company Limited.

 

“Instructions” means any instructions or orders given by the Client or its/his Authorized Person to the Company in accordance with Clause 2 of this Agreement

 

“Securities” means any shares, stocks, debentures, lending stocks, bonds, notes, unit trusts, certificates of deposits, or other commercial papers or securities of or issued by any bodies (whether incorporated or unincorporated) or any government agencies that are currently traded in the market and acceptable by the Company and may (in the absolute discretion of the Company) include (a) rights, options or interest (whether described by units or otherwise) in or related to any of the foregoing; (b) certificates of interest or participation or temporary or interim certificates of any of the foregoing, or notes or warrants to subscribe for or purchase any of the foregoing; or (c) any instruments commonly known as securities.

 

 “SEHK” means “The Stock Exchange of Hong Kong Limited”, including its successors or assignees and any entities created or survived as a result of its consolidation, amalgamation of mergers.

 

 “SFC” means “The Securities and Futures Commission of Hong Kong”

 

“Transactions” means any transactions concerning the purchase, subscription, sale, exchange or other disposal of any and all kinds of Securities including (but not limited to) safe keeping of Securities and providing nominee or custodian services, as well as other transactions effected pursuant to this Agreement.

 

1.2  The headings to the clauses are for reference only, and shall not affect the definitions and interpretation thereof.

 

1.3  Words denoting the singular shall include the plural and vice versa; words importing any gender shall include every gender; and references to person shall include companies, institutions, partnerships or any other body corporates and entities.

 

1.4  Unless otherwise specified, where the Company is granted with discretion, such discretion shall not be absolute discretion, and if such discretion is exercised, the Company shall not, to the largest extend permitted by applicable laws, be liable (regardless of any nature) to the Client or any other person, and the Company shall not be held accountable for its acts, omissions or deletions.

 

1.5  Unless the context otherwise requires, the terms and expressions not interpreted shall be explained in accordance with the rules, regulations and procedures of the SEHK and HKSCC as well as the “Securities and Futures Ordinance” or the regulations thereunder.

 

1.6  References in this Agreement to clauses and appendices are to the clauses and appendices of this Agreement.

 

1.7  References in this Agreement to an ordinance or a provision of any regulatory rules shall include the current version of such ordinance or provision and their amendments, replacements, modifications, extensions or re-enactments hereafter.

 

1.8  In the event of any inconsistency between any provision of this Agreement and any laws, the latter shall prevail.

 

 

2. Instructions and Authority

 

2.1  The Client confirms that the information provided in the Account Opening Form is complete and accurate. The Client will inform the Company of any changes to that information. The Company is authorized to conduct credit enquiries on the Client to verify the information provided.

 

2.2  All instructions shall be given by the Client (or the Authorized Person) orally either in person or by telephone, or in writing, delivered by hand, by post, facsimile transmission or electronic means or by other manners as from time to time accepted by the Company. The Company will not accept any sale and purchase placing orders instructions transmitted via telephone SMS, WeChat or WhatsApp.

 

2.3  The Client understands that from time to time the Company needs to act on facsimile or electronic instructions (including but not limited to email), and the Client understands that facsimile or electronic instructions are not secure means of communication and there are risks involved.  The Client hereby requests the Company to accept facsimile or electronic instructions for the Client’s convenience provided that the Company exercises reasonable care in verifying the authorized signature of the Client on the facsimile or the identity of the person giving the electronic instructions, the Company shall not be liable for any actions taken in good faith for accepting facsimile or electronic instructions that are not given by the true Authorized Person.

 

2.4  The Client agrees to bear all the risks arising from the breakdown or transmission failure of the communication facilities or from any other cause or causes beyond the control or anticipation of the Company and agrees to discharge the Company of any liabilities in this regard. The aforesaid risks include but not limited to a delivery errors, misunderstandings or errors arising from the verification by the Company of the identity of the Client or his Authorized Person.

 

2.5  The Client acknowledges and agrees that any instruction given or purported to be given by any means to the Company by the Client or by any Authorized Person and which are acted on or relied on by the Company shall at all times be irrevocable and bind the Client, whether or not such instructions are in fact given or authorized by the Client.  Under no circumstances, the Company has any duty to enquire or verify the identity or authority of the person giving instruction by any accepted means.

 

2.6  The Company will act as the Client’s agent in effecting transactions unless the Company indicate (in the Contract Note for the relevant Transaction or otherwise) that the Company is acting as principal.

 

2.7  Securities transactions effected by the Company on the Client’s behalf are subject to the laws, regulations, constitution, by-laws, rules, customs and transaction levies of the relevant market, exchange, clearing house or jurisdiction as amended from time to time.

 

2.8  Where the Client is approved by the Company to engage in margin trading, the Client will be subject to further terms and conditions (as the case may be) set out in Section 2 “Client Agreement for Margin Accounts”. However, nothing herein shall require the Company to provide such further facilities. Where liabilities arise pursuant to these further facilities, in addition to any rights, the Company may have, the Securities held hereunder shall be treated as security or collateral of such facilities (without any other documentation signed by the Client) and the same shall apply to all liabilities howsoever arisen.

 

2.9  By applying for the use of the Internet trading and other services provided by the Company, the Client agrees to accept to be bound by the further terms and conditions set out in Appendix 3 “Electronic Service Agreement”. However, nothing herein shall require the Company to provide such other services.

 

2.10 The Client acknowledges and agrees that the Client retains full responsibility for all Transactions, that the Company is responsible only for the execution, clearing and carrying out of the Transactions, and that the Company assumes no responsibility or obligation for any conducts, actions, representations or statements of any introducing firms, investment advisors or other third parties in connection with the Account or the Transactions. The Company will not be responsible for the suitability of any Transactions carried out by the Client nor will the Company be responsible for their profitability, tax, legal and accounting consequences of any Transactions.

 

2.11 Any advice or information (whether or not solicited) provided by the Company and its directors, officers, employees or agents shall not constitute an offer to enter into a Transaction or an investment advice, and the Company shall assume no responsibility whatsoever in respect of such advice or information. The Client should make his own independent judgments without reliance on the Company for entering into any Transactions.

 

2.12 If the Company solicits the sale of or recommends any financial product to the Client, the financial product must be reasonably suitable for the Client having regard to the Client’s financial situation, investment experience and investment objectives. No other provision in these Terms or any other document the Company may ask the Client to sign and no statement the Company may ask the Client to make derogates from this Clause.

 

 

3. Dealing Practice

 

3.1  The Company is hereby authorized to act upon the instruction of the Client to deposit, purchase and/or sell securities for the Account(s) and otherwise deal with securities, receivables or monies held in for the Account(s).

 

3.2  Notwithstanding anything herein contained, the Company shall be entitled, at its absolute discretion, to refuse to act on any of the Client’s instructions and shall not be obliged to give any reason for such refusal. In particular and without prejudice to Clause 4.1, the Company may refuse to act on an instruction of the Client if at the time of such instruction, there are insufficient securities to effect settlement of the relevant transaction on the due settlement date.

 

3.3  The Client acknowledges that telephone calls or other forms of communication between the Client and the Company may be recorded or otherwise electronically monitored without any warning messages and that the record may be used as final and conclusive evidence of the instructions in case of disputes. While such tapes will remain the property of the Company, the Company will provide to the Client on the Client’s request and at the Client’s expense a copy of such tape.

 

 

3.4  The Client shall immediately notify the Company (Settlement/Accounts Department) after payment of funds to the Company by delivering to the Company evidence of such payment. The Client acknowledges that payment of funds to the Company may not be accredited to the Client’s Account or reflected in any account statement until such notification is received by the Company. The Client agrees that any interest payable to the Company under Clauses 5.2 shall be calculated on this basis.

 

3.5  Request to cancel or amend the Client’s orders is only possible before the orders are executed. In the case of full or partial execution of the Client’s cancelled orders, the Client agrees to accept full responsibility for the transactions.

 

3.6  By reason of physical restraints and rapid changes of securities prices, the Company may not always be able to execute the Client’s orders in full or at the prices quoted at any specific time or "at best" or "at market" and the Client agrees to be bound by such executions.

 

3.7  Market orders may result in unfavourable executions owing to volatile market conditions. Moreover, cancellation of market orders is rarely possible as they are subject to immediate execution.

 

3.8  The Client’s trading orders are good for the day unless the Client specifies otherwise.

 

3.9  If an account is maintained with the Company with no trading activity for the past 12 months or more, the account shall be treated as dormant account. If an account is inactive for 2 years with zero stock and zero balance on account, then the Company may obsolete the account without further notice.

 

3.10 The Client authorizes the Company to, at any time and in the Company’s absolute discretion, execute the Client’s instructions for purchase and/or sale of Securities in combination with or in separation from similar instructions received by the Company from other Clients. The Client agrees that if the Securities available is insufficient to satisfy the Company the combined Securities purchase or sale orders, the Company will assign to the relevant clients the actually purchased or sold number of Securities according to the sequence of the instructions received.

 

3.11 Where the Company or the Business Agent is unable to perform any order in full, the Company or such Business Agent shall have the right of partial performance without prior notice to or confirmation from the Client.

 

 

4. Settlement

 

4.1 Unless otherwise agreed, in respect of each sale and purchase transaction executed on the Client’s behalf, unless the Company is already holding cash or securities on the Client’s behalf to settle the transaction, the Client will:

 

4.1.1 pay the Company cleared funds or deliver to it securities in deliverable form; or

 

4.1.2 otherwise ensure that the Company has received such funds or securities; by such time as the Company has notified (whether verbally or otherwise) the Client in relation to the relevant transaction.

 

4.2 Unless otherwise agreed, the Client agrees that should the Client fail to make such payment or delivery of securities by the due date as mentioned above, the Company is hereby authorized to:

 

4.2.1 in the case of a purchase transaction, to transfer or sell any such purchased securities to satisfy the Client’s obligations to the company; or

 

4.2.2 in the case of a sale transaction, to borrow and/or purchase such sold securities to satisfy the client’s obligations to the Company.

 

4.3  The Client hereby acknowledges that the Client shall be responsible to the Company for any loss, costs fees and expenses incurred by the Company in connection with the Client’s failure to meet his obligations by the due date as described above.

 

4.4  The Account shall be opened in Hong Kong dollar or such other currency as the Company and the Client may agree from time to time. In the event that the Client instructs the Company to effect any Transaction in a currency other than Hong Kong dollar, any profits or losses arising from fluctuation in exchange rates of the relevant currencies will be borne by the Client alone. Any conversion from one currency into another required for the Company’s performance or any action or step under this Agreement may be effected by the Company in such manner and at such time as it may decide in its absolute discretion. The Client authorizes the Company to deduct from the Client’s Account any expenses incurred in the course of currency conversion. The Company reserves the right to decline at any time to accept and/or execute any of the Client’s instructions as to currency conversion.

 

 

5. Commissions, Charges and Interest

 

5.1  On all transactions, the Company is authorized to deduct the Company’s commissions and charges in connection with any transactions effected for the Client (as notified to the Client from time to time), all applicable levies imposed by the Exchange or Clearing House, brokerage, stamp duty, bank charges, transfer fees, interest and nominee or custodial expenses, immediately when due.

 

5.2  The Client shall pay interest on all overdue balances (including interest arising after a judgment debt is obtained against the Client) at such rates and on such other terms as the Company reserves the right to vary the rate without notifying the Client. Such interest shall be calculated and shall be payable upon demand being made by the Company or on the last day of each calendar month whichever is appropriate.

 

5.3  If the Company engages services of the Business Agent, the Company shall be entitled (for its own benefit) to accept and retain any commission or rebate the Company may receive in respect of any business the Company provides to the Business Agent on behalf of the Client.

 

5.4  The Clients shall bear any taxes, levies, tax reporting and other obligations imposed by relevant authorities in any relevant jurisdiction in respect of any instructions and/or activities made in his Account. If demanded by such third parties, the Company has the right to sell asset in the Client’s Account to settle any liabilities without prior notice to the Client.

 

5.5  The Company shall be entitled to deposit all monies held in the Account(s) and all monies received for or on the account of the Client with one or more segregated account(s) in Hong Kong, each of which shall be designated as a trust account or client account, at one or more authorized financial institution(s) or any other person approved by the SFC for the purposes of section 4 of the Client Money Rules. Unless otherwise agreed between the Client and the Company, the Company is entitled to retain any interest accrued on client’s monies held by the Company.

 

5.6  All commissions, charges and interests are subject to the fees and charges schedule on the Company’s website.

 

 

6. Safekeeping and Disposal of Securities

 

6.1  Any securities which are held by the Company for safekeeping may, at the Company’s discretion:

 

6.1.1 (in the case of registrable securities) be registered in the Client’s name or in the name of the Company’s nominee; or

 

6.1.2 be deposited in safe custody in a designated account with the Company’s bankers or with any other institution which provides facilities for the safe custody of documents. In the case of securities in Hong Kong, such institution shall be acceptable to the SFC as a provider of safe custody services.

 

6.2  Where securities are not registered in the Client’s name, any dividends or other benefits arising in respect of such securities shall, when received by the Company be credited to the Client’s account or paid or transferred to the Client, as agreed with the Company. Where the securities form part of a larger holding of identical securities held for the Company’s clients, the Client shall be entitled to the same share of the benefits arising on the holding as the Client’s share of the total holding.

 

6.3  Unless otherwise agreed with the Client, the Company will not, under Securities and Futures (Client’s Securities) Rule of the Securities and Futures Ordinance, to:

 

6.3.1 deposit any of the Client’s securities with a banking institution as collateral for an advance or loan made to the Company, or with the Clearing House as collateral for the discharge of the Company’s obligation under the clearing system;

 

6.3.2 borrow or lend any of the Client’s securities;

 

6.3.3 otherwise part with possession (except to the Client on Client’s instruction) of any of the Client’s securities for any purpose.

 

6.4  Any cash held for the Client, other than cash received by the Company in respect of transactions and which is on-paid for settlement purposes or to the Client, shall be credited to a client trust account maintained with a licensed bank as required by applicable laws from time to time.

 

6.5  Securities held by the Company for safekeeping pursuant to this Clause are held by the Company at the sole risk of the Client and the Company shall not be responsible for or liable in respect of any loss or damage suffered by the Client in connection hereof unless such loss or damage has been caused as a direct consequence of a gross act of negligence or fraud on the part of the Company.

 

6.6  Insofar as any such securities do not constitute “Collateral” as defined in the “Client Agreement for Margin Accounts” entered into by the Company and the Client, the Client hereby expressly authorizes the Company to dispose of such securities for the purpose of settling any liability owed by the Client (or who is the beneficial owner of such securities) to the Company for dealing in securities or financial accommodation provided by the Company to the Client which remains after the Company has disposed of all other assets designated as Collateral for securing the settlement of that liability.

 

6.7  The Client authorizes the Company to act on Instructions relating to the Client’s Securities, including the exercise of voting and other rights attached to the Securities. The Company may decline to act on any Instruction in his absolute discretion without giving any reason thereof, or when such Instruction is incomplete or ambiguous or when the Company does not have enough time to act on such Instruction. If the payment of any fees or expenses is required to exercise any of such rights, the Company does not need to comply with any Instruction of the Client unless and until it has received all amounts necessary to fund such exercise.

 

6.8  The Client agrees to deposit his own money which shall be used solely for investment in Securities, The Client further agrees not to deposit Securities, cheques, bank drafts or other assets not under his name into his Account, and the Company may also reject at any time such deposit of monies and/all assets by the Client. Should the Company decide to accept the Client’s deposit into his Account asset of the aforesaid third party, the Client shall indemnify all losses and liabilities incurred by the Company in connection thereby.

 

6.9  Securities returned to the Client do not need to be the original Securities received from the Client, but need to be Securities of the same quantity, type and description.

 

 

7. Liability and Indemnity

 

7.1  The Company will use all reasonable endeavours to comply with and carry out Instructions given by the Client and accepted by the Company concerning the Account or Transactions but neither the Company nor any of its directors, officers, employees or agents (save where it has been established that they or any of them have acted fraudulently or in wilful default) shall have any liability whatsoever (whether in contract, tort or otherwise) for any loss, expenses or damages suffered by the Client as a result of:

 

7.1.1 Any inability, failure or delay on the part of the Company to comply with or carry out any such instruction or any ambiguity or defect in any such instruction; or

7.1.2 The Company in good faith acting or relying on any Instruction given by the Client, whether or not such Instruction was given following any recommendation, advice or opinion given by the Company or by any of its directors, officers, employees or agents; or

 

7.1.3 The Company failing to perform its obligations hereunder by reason of any cause beyond its control, including any governmental or regulatory restriction, closure of or ruling by any Exchange (or any division thereof), suspension of trading, breakdown or failure of transmission or communication or computer facilities, postal or other strikes or similar industrial action, or the failure of any Exchange, Clearing House, Correspondent Agent or other person to perform its obligations; or

 

7.1.4 Any Exchange, Clearing House, Correspondent Agent or other person ceasing for any reason to recognize the existence or validity of transactions entered into by the Company on behalf of the Client, or failing to perform or close out any such contract provided that such cessation or failure shall not affect the Client’s obligations hereunder in respect of any such contracts or other obligations or liabilities of the Client arising therefrom; or

 

7.1.5 The mis-understanding or mis-interpretation of any instruction given or placed verbally or electronically, or delays or errors in transmission owing to electronic traffic congestion or any other causes, or any mechanical failure, malfunction, suspension or termination of the continued operation or availability and mechanical failure or inadequacy of the Company’s telephone or telecommunication system or installation in connection with the receipt and processing of instruction transmitted by telecommunication devices and all other related equipment, facilities and services.

 

7.2  The Client agrees to fully indemnify and keep indemnified the Company and its Correspondent Agents, and their directors, officers, employees and agents (“Indemnified Persons”) against any loss, cost, claim, liability or expense, including legal fees, that may be suffered or incurred by any and/or all of the Indemnified Persons, arising out of or in connection with any Transactions, or otherwise arising out of any action or omission by the Company in accordance with the terms of this Agreement, or arising out of any breach by the Client of any of its obligations under this Agreement, including any costs reasonably incurred by the Company in collecting any debts due to the Company or any unpaid deficiency in the Account, in enforcing the rights of the Company hereunder or in connection with the closure of the Account, and any penalty charged as a result of any Transaction to the Company by any Exchange and/or Clearing House.

 

7.3  If the Client suffers any pecuniary losses due to the Company’s default, his effective claims will be paid by the Compensation Fund established under the relevant regulatory rules, but shall be subject to the monetary caps and terms stipulated by such relevant regulatory rules. Therefore, there is no guarantee that such pecuniary loss will be paid in full, in part or at all by out of the Compensation Fund.

 

 

8. The Standing Authority of Client Money

 

8.1 Deposit any sum of monies into any segregated accounts which established and maintained by the Company or any members of the group within the Company (under the interpretation in “Companies Ordinance”)( “the Company Group”), may transfer to and between any of the segregated accounts, in order to discharge any obligations and liabilities owed by or on behalf of the Client to the Company Group, whether such obligations and liabilities are actual or contingent, primary or collateral, secured or unsecured, joint or several; and/or

 

8.2  Pay/transfer any sum of monies to Client’s securities account with the Company and/or any Hong Kong and/or overseas broker’s securities account and its successors and assignees, for the purposes of dealing in securities trading with Client or comply with settlement or margin requirement (if applicable); and/or

 

8.3  Pay/transfer any sum of monies to segregated accounts which established by the Company and to segregated accounts which established            by Hong Kong and/or overseas broker and/or clearing house, and transfer to and between any of the segregated accounts; and/or

 

8.4  Convert monies into any currencies

 

8.5  The Client understands that his/her securities may be subject to liens of third parties and the return of such securities to the Client may be subject to the satisfaction of such liens. The Client acknowledges that the authorizations given hereunder shall not affect any other authorizations given to the Company or any rights which the Client may have in dealing with the securities or securities collateral in question, including the Company’s right to dispose such securities or securities collateral in settlement of any liability owed by or on behalf of the Client to the Company or a third person.

 

8.6 The authorizations given hereunder may be revoked by the Client giving the Company written notice at the address set out above or      otherwise notified to the Client in writing. Such notice shall take effect upon the expiry of 14 days from the date of the Company actual receipt of such notice.

 

8.7  The Client understands that the authorizations given hereunder shall be valid for 12 months from the date hereof, subject to renewal.         The authorizations given hereunder shall be deemed to be renewed if the Company gives to Client a written reminder at least 14 days prior to the expiry date of the relevant authorizations, and the Client does not object to such deemed renewal before such expiry date.

 

8.8 This Agreement has been explained to the Client and the Client understands and agrees with its contents.

 

9. Client Responsibility for Disclosure of Interests

 

9.1  The Client shall pay attention to the provisions of the Securities and Futures Ordinance and the obligations therein to disclose certain shareholdings (including corporate and family interests). Other disclosure obligations may arise under legislation of other jurisdictions or the rules and regulations of relevant markets.

 

9.2  The Company is not responsible for reminding the Client of any obligations in general or any obligations that may arise from any Instructions of the Client or any obligations arisen as a result of any Transaction or from any holdings or otherwise. Such obligations of disclosure are the personal obligations of the Client. The Company shall not be obliged to notify the Client in respect of his holdings in any form or in respect of any time limits of such holdings, except any notifications or statements that are expressly required to be given according to these clauses. The Company shall not be liable for any losses, costs or expenses arising from any failure or delay by the Client or any other person to disclose in accordance with any relevant obligations or from any delay or default in notifying the Client in respect of executing any Instructions, whereas the Client shall indemnify the Company against any losses, costs or expenses arising from any such failure, delay or default.

 

 

10. Set-off, Lien and Combination of Accounts

 

10.1 Without prejudice to any general liens or rights of set-off of the Company or similar rights the Company may be entitled under laws and in addition such rights, the Company shall also be subject to general liens towards any monies, commodities or other properties that the Client delivers to the Company for custody for any purpose or holds in any Account (whether held by himself or jointly with others), or that are held by the Company in custody at any time and for any purpose (including for safekeeping) as a continuing security for the compensation and payment of all debts the Client owing to the Company as a result of the Transactions or otherwise.

 

10.2 Without prejudice to any general liens or rights of set-off of the Company or similar rights the Company may be entitled under laws and in addition such rights, in respect of all or any securities assets, monies or any other properties deposit at or otherwise held by the Company on behalf of or in the name of the Client, regardless such Securities, assets, monies or other properties of custody or other nature, if the Client has any due yet unpaid amounts, the Company may sell such Securities, assets, monies or other properties or any part thereof at such prices and in such manners as the Company determines (the Company is authorized to do all such things necessary in connection with such sale), and apply the proceeds of the sale to set off or satisfy the debts of the Client towards the Company, regardless whether any other person may have interests in such properties or whether the Company has advanced payments respecting such properties, and regardless how many Accounts the Client opens with the Company, and the Company has the right to, at any time without notice to the Client, combine and/or consolidate the Client’s Accounts and utilize the amounts therein to set off the obligations or liabilities the Client owing towards the Company, whether such obligations are actual or contingent, fundamental or incidental, secured or unsecured, joint or several.

 

10.3 Without limitation or amendment to the general provisions of this Agreement, the Company is hereby authorized to, without prior notification, transferred any assets among different Accounts the Client opens with the Company.

 

10.4 For the purpose of combination, consolidation or set off, the Company may, at any time without notice to the Client and at its discretion, convert by lawful means the monies in the Account or under the services into any currencies at such exchange rate at the date of entry as   determined by the Company.

 

11. Transaction Notices and Statements

 

11.1 The Company will report to the Client about the status of transactions execution in the following ways:

 

 (a) promptly by telephone, facsimile or otherwise; and/or

 

 (b) by sending the Client Transactions confirmation and account statement by post or by electronic means in two business days after transactions execution.

 

 (c) In any particular month, unless there is no Transaction or balance, the Company will send to the Client monthly statement (in hard copy) showing the monthly transaction summary or an electronic monthly statement.

 

11.2 The Client has the duty to examine carefully the Transaction confirmations, the account statements and the monthly statements, and to notify the Company in writing of any error or inconsistency therein within 5 Business Days, or such other period of time as specified by the Company generally or in any particular case, after the sending date of such confirmations or statements. The Client agrees that the Company is not responsible for the damages caused by the delay in notifying the Company of such errors and for the influence of market fluctuations. Furthermore, in the absence of manifest errors, the Transaction confirmations, the account statements and the monthly statements shall be conclusive, the Client shall be deemed to have waived the right to challenge any errors, and the Company shall be released from all claims by the Client in connection with the statements or any action taken or omitted regarding the Account.

 

12. Events of Default

 

Any one of the following events shall constitute an “Event of Default”:

 

12.1 The Client’s failure to pay any deposits or any other sums payable to the Company or submit to the Company any documents or deliver any securities to the Company hereunder, when called upon to do so or on due date;

 

12.2 Default by the Client in the due performance of any of the terms of this Agreement and the observance of any by-laws, rules and regulations of the appropriate Exchange and/or Clearing House;

 

12.3 The filing of a Petition in bankruptcy, winding up or the commencement of other analogous proceedings against the Client;

 

12.4 The Client is judicially declared insane or incompetent;

 

12.5 The levy or enforcement of any attachment, execution or other process against the Client;

 

12.6 Any representations or warranty made by the Client to the Company in this Agreement or in any document being or becoming incorrect or misleading;

 

12.7 Any consent, authorization or board resolution required by the Client (being a corporation or a partnership) to enter into this Agreement              being wholly or partly revoked, suspended, terminated or ceasing to remain in full force and effect;

 

12.8 The occurrence of any event which, in the sole opinion of the Company, might jeopardize any of its rights under this Agreement, and upon the occurrence of any of such events, the Company shall be entitled, in its absolute discretion, to the extent as permitted by law, without notice or demand and without prejudice to any other rights or remedies available to the Company, forthwith to:

 

(a)  sell or realize all or any part of the Client’s property held by the Company in such manner and upon such terms as the Company may conclusively decide and satisfy client’s obligations and indebtedness towards the Company out of the net proceeds (with fees, expenses and costs deducted) thereof;

 

(b)  cancel any open orders for the purchase or sale of securities;

 

(c)   sell any or all securities long in the Client’s account;

 

(d)  buy any or all securities which may be short in the Client’s account;

 

(e)  exercise any of its rights under this Agreement; and/or;

 

(f)   close the Account or terminate all or any part of this Agreement.

 

 

13. Terms and Termination

 

13.1 This Agreement will commence on the date upon which any one of its Directors, Managers, Authorized Officers or Responsible Officers sign this Agreement and continue until the Agreement is closed by either party.

 

13.2 The Agreement may be terminated by the Company if any one of the Event of Default occurs.

 

13.3 Either party may terminate this Agreement at any time by giving the other party a notice in writing.

 

13.4 Pursuant to and subject to the “Anti-Money Laundering and Counter-Terrorists Financing (Financial Institutions) Ordinance”, Cap.615 and the relevant Guidelines from time to time issued by “The Securities and Futures Commission”, the Company may suspend or terminate any of the Client’s account if:

 

(a)  the Client fails to provide sufficient verification of his identity within a reasonable timeframe;

 

(b)  the Client fails to provide sufficient verification of his address within a reasonable timeframe;

 

(c)   the Client fails to provide valid contact telephone number and/or address to the Company;

 

(d)  the Client rejects the amendments made by the Company to the provisions of this Agreement or rules of business; or

 

(e)  the laws /regulations required so.

 

13.5 Upon termination of this Agreement, all amounts due and owing by the Client to the Company shall become immediately due and payable.  The Company shall cease to have any obligations to purchase or sell securities on behalf of the Client in accordance with the provisions of this Agreement, notwithstanding any Instructions from the Client to the contrary.

 

13.6 In case of any cash or securities balances in the Client’s account upon termination of this Agreement, the Client shall withdraw such balances within 5 business days from the date of such termination. If the Client does not do so, the Client agrees that the Company may, on the Client’s behalf and without any responsibility for any loss or consequence on its part, sell or dispose all of the Client’s securities in the market or in such manner and at such time and price as the Company may reasonably determine and send to the Client, at the Client’s sole risk, its cheque representing any net sale proceeds and credit balances in the Client’s account to the Client’s last known address.

 

 

14. Notices and Communications

 

14.1 The Company will notify the Client of any material changes in respect of the Company’s business which may affect the services the Company provided to the Client.

 

14.2 All notices, reports, statements, confirmations and other communications shall be in written or electronic form (if applicable) and shall be delivered in person, by post, by facsimile or by e-mail to the Client, at the address, facsimile number or e-mail address provided by the Client in the Account Opening Form, or at such other address, facsimile number or e-mail address as designated by the Client through written notice to the Company; and if to the Company, at the address of its office as the Company may from time to time select and notify the Client. For general issues such as changes in commission, interest rate, account opening fees, various transaction fees alike and amendments to this Agreement, the Company may inform the Client by ways of website releases, electronic trading system publications and other appropriate announcements without having to inform the Client through the above means.

 

14.3 All notices, reports, statements, confirmations and other communications shall be deemed to have been duly served:

 

(a)  if delivered in person, at the time of delivery to the Client; or

 

(b)  if delivered by facsimile or e-mail, at the time of transmission; or

 

(c)   if sent by post, within 2 Business Days after posting; or

 

(d)  if delivered by public announcement, on the date of publication.

 

14.4 The Client agrees to check regularly his mailbox, e-mail inbox, facsimile machine and other facilities used to receive communications from the Company. The Company will not be responsible for any losses arising from the Client’s failure, delay or negligence to check such sources or facilities of communication or arising from any failure of such sources or facilities of communication.

 

14.5 For the purpose of protecting the interests of both parties and detecting and rectifying misunderstandings in a timely manner, the Client agrees and authorizes the Company, at its discretion and without further prior notice, monitor and record the electronic communications and telephone conversations between both parties.

 

 

15. Amendments

 

15.1 The Company shall be entitled to make such    amendments, additions, deletions or variations (“Amendments”) to the terms as the Company consider necessary including but not limited to ensuring compliance with the rule referred to in the following Clause 19 - “Laws and Rules” hereto. The Company will give the Client written notice of any such Amendments as soon as practicable after such Amendments are made, and such Amendments shall take effect when such notice is dispatched to the Client.

 

15.2 The Client agrees to notify the Company forthwith of any changes in any particulars or information supplied in this Agreement by the Client.

 

15.3 No amendment made by the Company to the terms in this Agreement or by the Client to the Company in relation to the information supplied herewith will affect any outstanding order or transaction or any legal rights or obligations which may have arisen prior thereto.

 

16. Agents

 

The Company is authorized to employ agents to perform all of its duties hereunder and to provide information regarding the Account to such agents. The Company may seek, at the Client’s cost and act on an opinion from any lawyer, accountant or other expert and shall not incur any liability by acting upon such opinion.

 

 

17. Short Selling

 

17.1 The Client undertakes that he will not effect any short selling order (for example, an order for sale of securities to which the Client does not presently own or is entitled to only as a result of borrowing these securities) through the Company.

 

17.2 The Client understands that where the Company is selling as agent, the Company shall not convey or accept an order to sell securities which is a short selling order at the Hong Kong Stock Exchange.

 

17.3 The Client will be responsible for any losses resulting from their settlement failures.

 

 

18. Confidentiality

 

18.1 The Company will keep information relating to the Account confidential but may provide any such information to the Exchange and the SFC or any other regulatory authorities (including overseas regulatory authorities) to comply with their requirements or requests for information, without any consent from or notification to the Client.

 

18.2 Where the Client is an individual, the Company is subject to the Hong Kong Personal Data (Privacy) Ordinance which regulates the use of personal data concerning individuals. The Client acknowledges and undertakes that he fully understands and accepts the provisions as set out in Appendix 1 “Personal Statement Collection Statements”

 

 

19. Laws and Rules

 

19.1 All transactions in securities which the Company effects on Client’s instructions shall be effected in accordance with all laws, rules and regulatory directions applying to the Company. This includes the rules of The Stock Exchange of Hong Kong Limited (“the Exchange”) and of the Hong Kong Securities Clearing Company Limited (the “Clearing House”). All actions taken by the Company in accordance with such laws, rules and directions shall be binding on the Client.

 

19.2 Each of the term of this Agreement is severable and distinct from the others. If any term in this Agreement is inconsistent with any present or future law, rule or regulation of the Exchange, the Clearing House or any authority having jurisdiction over the subject matter of this Agreement, such provision shall be deemed to be rescinded or modified in accordance with any such law, rule or regulation. In all other respects, this Agreement shall continue and remain in full force and effect.

 

19.3 The Client acknowledges that he has been required to pay special attention to the provisions as amended from time to time in “The Securities and Futures Ordinance” (“SFO”) related to the market misconduct and disclosure of interests sections. The Client has been reminded that he himself shall be responsible for compliance with and for ensuring compliance with any duties or obligations arising from the SFO. The Client confirms that he is aware of the provisions contained in the SFO and that he will comply and ensure compliance with the foregoing clauses so as to ensure the Company will not be in breach of the SFO as a result of anything done or proposed to be done by the Company when acting on the Client’s instructions.

 

19.4 If the Company fails to meet the obligations to the Client pursuant to this Agreement, the Client shall have a right to claim under the Compensation Fund established under “The Securities and Futures Ordinance”, subject to the terms of the Compensation Fund from time to time, and as mentioned in Clause 7.4 above.

 

20. Joint Account

 

20.1 Where the Client comprises two individuals:

 

20.1.1 Each such individual shall be jointly and severally liable for all obligations under this Agreement;

 

20.1.2 The Company may accept Instructions from, give receipts to and for all purposes deal with any one of such individuals without notice to the other individual and the Company is not responsible for determining the purposes or propriety of an Instruction the Company receives from any such individual or for the disposition of payments or deliveries among such individual. The Company reserves the right to require written instructions from all such individuals at its discretion;

 

 

20.1.3 Any delivery of payments or securities to any one of such individuals shall be a valid and complete discharge of the Company’s obligations to each individual regardless of whether such delivery is made before or after the death of any one of such individuals;

 

20.1.4 Any notices and communications sent to one such individual will be deemed notice to all individuals holding the Account;

 

20.1.5 On the death of any of such individual (being survived by any other such individual), this Agreement shall not be terminated and the interest in the Account of the deceased will thereupon vest in and inure to the benefit of the survivor(s) provided that any liabilities incurred by the deceased Client shall also be enforceable by the Company against such deceased Client’s estate. The surviving Client(s) shall give the Company written notice immediately upon any of them becoming aware of any such death;

 

20.2 This Agreement shall be binding on the Client’s heirs, executors, administrators, personal representatives, successors and assignees, as the case may be.

 

 

21. Conflict of Interest

 

21.1 The Client acknowledges and agrees that the Company, its directors, officers or employees and its agent may trade on its/their own account.

 

21.2 The Company is authorized to buy, sell, hold or deal in any securities or take the opposite position to the Client’s order whether it is on the Company’s own account or on behalf of its other Clients.

 

21.3 The Company is authorized to match the Client’s order with those of other Clients.

 

21.4 In any of the situations referred to in this Clause, the Company shall not be obliged to account to the Client for any profits or benefits obtained.

 

21.5 The Company has the right to effect Transactions in Securities in which the Company has a position or in respect of which the Company           acts as underwriter, sponsor or otherwise.

 

21.6 The Company has the right to have the Instructions executed by any other brokers.

 

21.7 The Company has the right to request, accept and retain any rebates, brokerage fees, commissions, fees, benefits and discounts arising           from execution of trading and other benefits derived from Transactions. The Company may also in its sole discretion provide any benefits          to any persons related to such Transactions.

 

 

 

 

22. Assignment

 

22.1 The Client shall not assign, transfer or dispose of all or any part of his rights, interests or obligations in or under this Agreement to any third                  party without the prior written consent of the Company.

 

22.2 The Company shall have the right to assign, transfer or otherwise dispose of all or any of its rights, interests or obligations in or under this Agreement to any third party as it thinks fit and without having to notify Client or obtain Client’s consent.

 

 

23. Representations and Warranties

 

The Client represents, warrants and undertakes (and such representations, warranties and undertakings shall be deemed to be repeated by the Client on the date on which Transaction is made pursuant to this Agreement) that:

 

23.1 The information provided by the Client pursuant to this Agreement is true, accurate and complete, and the Company shall be entitled to rely thereon until the Company has received written notice of any changes to such information. The Client will notify the Company immediately in writing of any material changes in such information; the Company also has the obligation to inform the Client timely of any material changes on its name, address, registration status, services, charge rates and margin/short selling facilities;

 

23.2 All necessary consents or authorizations necessary for signing these Terms and for the carrying out of any Securities Transaction on any market have been obtained and are in full force and effect;

 

23.3 The Client has the authority, power and legal capacity to open the Securities Account and to perform its obligations under these Terms, and these Terms constitute valid and legally binding obligations of the Client;

 

23.4 The execution, delivery and performance mentioned in any clauses will not violate or in breach of any laws applicable to or binding on the Client or enforce the creation of any lien, security interest or encumbrance on the Client’s assets;

 

23.5 The Client shall provide or endeavour to provide the Company with the required relevant information, so that the Company could perform and comply with its obligations under this Agreement;

 

23.6 Within the scope permitted by law, the Client warrants and undertakes to ratify and confirm as required by the Company any acts, deeds, things or matters lawfully done by the Company in the proper performance of its duties or obligations hereunder.

 

 

24. General

 

24.1 Time shall in all respect be of essence in the performance of all of the Client’s obligations under this Agreement.

 

24.2 A failure or delay in exercising any right, power or privilege in respect of this Agreement by the Company will not be presumed to operate as a waiver, and a single or partial exercise of any right, power or privilege will not be presumed to preclude any subsequent or future exercise of that right, power or privilege.

 

24.3 The Client acknowledges that he has read either the Chinese or English version of this Agreement and has fully understands the contents of this Agreement. The Client accepts this Agreement in its entirety. In the event that there is any inconsistency between the English version and the Chinese version of this Agreement, the English version shall prevail.

 

24.4 This Agreement shall be governed by and construed in accordance with the laws of Hong Kong. The parties to this Agreement hereby irrevocably submit to the non-exclusive jurisdiction of the courts of Hong Kong, provided that the Company shall have the right to enforce this Agreement in such other courts having jurisdiction as it selects.

 

24.5 Where the Company explicitly receives monetary benefits from a product issuer (directly or indirectly) for distributing an investment product, the monetary benefits that are receivable by the Company in general would not be more than 5% of the of the investment amount. The Company shall disclose separately relevant monetary benefits in Client’s statement if this is not the case.

 

24.6 Words importing the singular shall include the plural and vice versa; and words importing a gender shall include all genders.  Words denoting a person shall include a firm, a sole proprietorship, a partnership and a corporation and vice versa.

 

24.7 The Client agrees that this Agreement and all its terms shall be effective individually and collectively in regards to the Accounts opened or re-opened with the Company, and shall be legally binding to the Company, its successors and assignees (whether arising due to merger, consolidation or otherwise) as well as to the Client himself, his heirs, executors, administrators, successors and assignees.

 

24.8 Severability: If any provisions of this Agreement are held to be invalid or unenforceable by any court or regulatory body, such invalidity or unenforceability shall apply only to such provisions. The validity of the remaining provisions shall not be affected thereby and this Agreement shall continue to be effective after such invalid provisions are excluded.

 

24.9 If the Company solicits the sale of or recommends any financial product to the Client, the financial product must be reasonably suitable for the Client having regard to the Client’s financial situation, investment experience and investment objectives. No other provision in these Terms or any other document the Company may ask the Client to sign and no statement the Company may ask the Client to make derogates from this Clause.

 

24.10 The Company will not open accounts or effect transactions for U.S. persons (except as permitted under Rule 15a-6 of the Securities Exchange Commission).

 

24.11 Electronic Signature

 

It is hereby agreed and declared that, without prejudice and in addition to all applicable laws, rules and regulations, the Company is entitled (but not obliged) to accept the Client’s electronic signature(s) attached to or logically associated with all instructions, directions and documents in digital or electronic form (including, without limitation, the Account Opening Form and incidental documents thereto) as       genuine and authentic signature(s) of the Client for all purposes. All instructions, directions and documents with electronic signature(s) in the manner as above (if so, accepted by the Company) shall be, and deemed to be, conclusively binding on the Client. Further, it is hereby further agreed and declared that the Client shall waive all his/her/its rights to challenge the validity or authenticity of electronic      signature(s). For the purpose of this clause, electronic signature means any letters, characters, numbers or other symbols in digital form attached to or associated with an electronic instruction, direction and document, and executed or adopted for the purpose of authenticating or approving thereof.

 

25. Risk Disclosure

 

25.1 The Client represents and acknowledges that he has been fully explained of the Risk Disclosure Statements (annexed as Appendix 2) and has been invited to seek independent legal and financial advices in relation to these “Risk Disclosure Statements”.

 

25.2 The Client further represents that he has read the Risk Disclosure Statements and fully understands the contents and agrees to be bound in all respects by the same.

 

 

Section 2 Client Agreement for Margin Accounts

 

This Client Agreement for Margin Accounts is supplemental to the “Client Agreement for Cash Accounts” to which it is annexed, and which is entered into between Solomon JFZ (Asia) Holdings Limited (“the Company”) and the Client, so that the Client’s Account could conduct margin trading (“Margin Account”) and the Company agrees to grant, at the Client’s request, credit facilities (“Facility”) to the Client for the Client’s Transactions. Where any conflict arises between the “Client Agreement for Cash Accounts” and the provisions of this “Client Agreement for Margin Accounts”, the provisions of the latter shall prevail.

 

1. Definitions

 

1.1  Terms in this “Client Agreement for Margin Accounts” shall have the same meanings as defined in the “Client Agreement for Cash Accounts” unless stated otherwise.

 

1.2  References to “Account” in the “Client Agreement for Cash Accounts” will be deemed to include the Margin Account Established pursuant to this “Client Agreement for Margin Accounts”.

 

1.3  “Collateral” means all Monies and Securities the Client now or at any time hereafter deposits with, transfers or transfers to or held by the Company, or transfers to or held by any other person in circumstances where the Company accepts as security for the Client’s liabilities under the Agreement. Such Collaterals shall include Monies and Securities that come into the possession, custody or control of the Company from time to time for any purpose (including any additional or substituted Securities and all dividends or interest paid or payable, rights, interest, monies or properties accrued or at any time offered by way of redemption, bonus, preference shares, options or otherwise in respect of such Securities or additional or substituted Securities).

 

1.4  “Credit Limit” means the maximum amount of Facility that the Company could grant to the Client irrespective of the amount of Collateral and the Margin Ratio of the Client.

 

1.5  “Margin Ratio” means certain percentage of the value of the Collateral, which percentage will not be higher than the percentage of the      amount the Client is permitted to borrow from the Company (or as guarantee of other forms of financial accommodations) to the value of the Collateral.

 

 

2. Margin Facility

 

2.1  This Facility will be extended to the Client in accordance with the provisions set out in this “Client Agreement for Margin Accounts”, any credit documentation and fee schedules provided by the Company to the Client and the “Client Agreement for Cash Accounts” (collectively the “Margin Facility Terms”). The Client agrees that such Facility will only be used for purposes in connection with the acquisition or holding of Securities by the Company for the Client.

 

2.2  Subject to Clause 2.4, the Company may grant the Client an amount of Facility not exceeding such Credit Limit as the Company notifies the Client from time to time. The Company may, by notice from time to time, vary the Credit Limit and the Margin Ratio available to the Client. Notwithstanding the Credit Limit that has been notified to the Client, the Company shall have the discretion to extend a Facility exceeding such Credit Limit to the Client, and the Client agrees that the Client shall be liable to repay the full amount of any Facility granted by the Company in accordance with the provisions of this Agreement.

 

2.3 The Client instructs and authorizes the Company to draw on the Facility to satisfy the amounts payable to the Company in respect of the  Client’s purchase of Securities, performance of such margin obligations for any positions as required by the Company, or payment of any commission or other costs and expenses owing to the Company.

 

2.4 The Company shall be entitled at any time to refuse to provide any Facility to the Client. The Client understands that the Company will not provide any Facility to the Client especially when any of the following circumstances arise:

 

(a)  the Client fails to perform any provisions of this Agreement; or

 

      (b)  The Company believes that material adverse changes are occurring or have occurred to the financial condition of the Client, any person which might adversely affect the Client’s liabilities under the Agreement or the performance of the Client’s obligations under the Agreement; or

 

(c)   the advancement provided would lead to the applicable Credit Limit being exceeded; or

 

(d)  the Company, in its absolution discretion, considers it prudent or desirable not to provide such Facility.

 

2.5  As long as the Client has any indebtedness owing to the Company, the Company shall be entitled to refuse at any time and from time to time any withdrawal by the Client of any or all Collaterals from the Client’s Account; and without the prior written consent of the Company, the Client shall not withdraw any Collateral in part or in full from the Client’s Account.

 

2.6  If the Company, in its absolution discretion, determines that it is necessary to provide adequate guarantee for the Facility it provides, the Client shall, on demand of the Company, pays a certain sum of deposit or margin in such amount and/or form as the Company designates by ways of cash, securities and/or other assets, and such deposit or margin shall be paid to the designated Account within such time as specified (referred to as a "Margin Call"). For the purpose of making a Margin Call, the Company shall use its best endeavours to contact the Client as soon as possible by phone through the number provided by the Client in the Account Opening Form, and/or make the Margin Call to the Client by post, facsimile, email or otherwise. Client agrees that he shall be deemed to have been properly notified even if the Company fails to contact the Client by phone or the Client does not receive such written notice.

 

2.7  Any failure on the part of the Client to comply with the provisions in Clause 2.6 of this Agreement will constitute an Event of Default under the “Client Agreement for Cash Accounts”.

 

2.8  The Client agrees to pay interest on the Facility he received, and such interest will be accrued on a daily basis. The calculation of interest rate shall be at a level permitted under the Money Lenders Ordinance and will vary according to the prevailing money market condition, and the Company shall notify the Client of such changes from time to time. Such interest may be deducted by the Company from the Margin Account or any other Accounts of the Client with the Company.

 

2.9  If the Client fails to pay the margin or deposit or any amount payable to the Company provided in this Agreement prior to the deadline requested by the Company, or if the Client fails to comply with any terms of this Agreement; then, without prejudice to any other rights    that the Company may enjoy, the Company shall be entitled, without notice to the Client, to close the Client’s Margin Account and/ or dispose of any or all Securities held for or on behalf of the Client. The Company shall also be entitled to apply the proceeds of such   disposal and any cash margin to satisfy all outstanding amounts owing to the Company. The Client agrees that the Company shall be entitled to sell or dispose the Securities in the Client’s Account at market price, and the Company shall not, in any event, be liable for any losses suffered by the Client, nor shall the Company be liable to account for any profits earned thereafter. If the proceeds of such sale of Securities are insufficient to satisfy all liabilities due from the Client to the Company, the Client undertakes that he will repay any due and payable amounts at the request of the Company.

 

2.10 The liabilities due from the Client to the Company and the amounts payable by the Client to the Company include but not limited to the margin Facilities and their interests, all commissions, fees, expenses, charges and other outgoings, legal fees and collection expenses, and other indebtedness due from the Client to the Company.

 

 

3. Charges

 

3.1 The Client, as beneficial owner, charges in favour of the Company by way of first fixed charge to all the Client’s rights, titles, benefits and interests whatsoever in and to the Collateral as a continuing Collateral ("Charge"), so that the Client could satisfy on demand all monies and liabilities (absolute or contingent) and perform now or in future the obligations which may be due, owing or incurred under the      Margin Facility Terms or the liabilities which the Client owing to the Company on any Account or in any manner (whether alone or jointly with any other person and in whatever name style or firm), together with interest from the date of demand to the date of repayment as well as and any commissions, legal and other costs, charges and expenses as recorded in the records of the Company.

 

3.2  The Company will credit all dividends or other benefits arising from the Collateral received on behalf of the Client to the Margin Account as Collateral.

 

3.3  Notwithstanding the Client makes any intermediate payment to the Company or liquidates the Account or satisfies all or part of the debts, and notwithstanding the Client closes of any Account with the Company and the Client (either alone or jointly with others) subsequently re-opens any Account with the Company, the Charge shall be a continuing security and shall extend to cover all or any sum for the time being constitutes the debt balance of the Client in any Account with the Company or the debt balance of the Client due to the Company elsewhere.

 

3.4  The Client represents and warrants that the Collateral is legally and beneficially owned by the Client himself, that the Client is entitled to deposit the Collateral with the Company, that the deposited Collateral is and will remain free from any liens, charges or encumbrances of any kind, and that any stocks, shares and other securities comprised in the Collateral are and will be fully paid up.

 

3.5  Upon the Client has irrevocably paid in full of all sums which may be or become payable under the “Client Agreement for Cash Accounts” and performed in full the Client’s obligations under the Margin Facility Terms, the Company will, at the Client’s request and payment of the necessary expenses, return to the Client all the rights, titles and interests of the Company in the Collateral and will act on such directions and instructions as the Client requires for the proper handling of such return.

 

3.6  Until the Charge becomes enforceable,

 

(a)  the Company shall have the right, subject only to giving notice to the Client, to exercise the rights relating to the Collateral to protect the value thereof; and

 

(b) except as otherwise provided in this “Client Agreement for Margin Accounts”, the Client may render the exercise of other rights attached to or connected with the Collateral, but this shall not contradict to the Client’s obligations under the Margin Facility Terms or may not in any way prejudice the Company’s rights in relation to the Collateral.

 

 

4. Power of Attorney

 

The Client, by way of guarantee, irrevocably appoints the Company as the Client’s attorney to act on the Client’s behalf as well as do all acts and things and sign, seal, execute, deliver, perfect and enter into all deeds, instruments, documents, acts and things in the Client’s name, so that the Client could perform the obligations imposed on the Client pursuant to the Margin Facility Terms, and so that the Company could generally exercise the rights and powers conferred on the Company pursuant to the Margin Facility Terms or by law, including (but without limitation):

 

      (1)  to execute any transfer or guarantee in respect of any Collateral;

 

      (2)  to perfect its title in respect of any Collateral;

 

      (3)  to ask for, require, demand, receive, settle and satisfy in full any and all monies and amounts claimed due or to become due under or arising out of any Collateral;

 

      (4)  to give valid receipts and to discharge and endorse any cheques or other instruments or drafts in connection with any Collateral;

            

      (5)  generally, to file any claims or take any legal actions or proceedings as it considers necessary and advisable to protect the guarantee created under the Margin Facility Terms.

 

 

5. Disposal of Collateral

 

The Client agrees that, when carry out a sale Transaction pursuant to the “Client Agreement for Cash Accounts” or the Margin Facility Terms, the Company shall have the absolute discretion to sell or dispose of any Collateral, and when the Company carries out the sale Transaction, a declaration made by a staff of the Company to the effect that the underlying power of sale has become exercisable shall be conclusive evidence of the related fact to any purchasers of the Collateral or other persons receiving the title pursuant to such sale Transaction, and no person dealing with the Company or its nominees shall be concerned to inquire into the circumstances of such sale Transaction.

 

 

6. Termination of Facility

 

6.1  The Facility is repayable on demand and may be varied or terminated in the absolute discretion of the Company. In particular, the Facility will be terminated upon the occurrence of any one or more of the following events:

 

(1)  the withdrawal or non-renewal of the Client’s authorization to the Company as required by Section 7 of the Securities and Futures(Client Securities) Rules; or

 

(2)  the termination of the “Client Agreement for Securities Trading” under the clause “Terms of Termination”, and for this purpose, any notice of termination shall be deemed to be the notice of termination of the Facility.

 

6.2  Upon termination of the Facility, any outstanding indebtedness of the Client shall forthwith be repaid to the Company.

 

6.3  The repayment of all or any of the loan amounts owed to the Company will not by itself constitute cancellation or termination of the Margin Facility Terms.

 

 

7. Guarantees Unaffected

 

Without prejudice to the generality of the foregoing, either the Charge or the amounts thereby guaranteed shall not be affected, in any way, by any of the following events:

 

(1)  any other guarantees, warranties or indemnities now or hereafter held by the Company in accordance with the Margin Facility Terms or any other liabilities;

 

(2)  any other variations or amendments to or waivers or releases of any margins, guarantees or indemnities or other documents (including the Charge, except the relevant variations, amendments, waivers or releases);

 

(3)  the enforcement or non-enforcement or release by the Company of any margins, guarantees or indemnities or other documents (including             the Charge);

 

(4)  any time, indulgence, waiver or consent given to the Client or any other person by the Company;

 

(5)  pursuant to the Margin Facility Terms, the making or absence of any demand for repayment of any sum to the Client by the Company or any other person;

(6)  the insolvency, bankruptcy, death or insanity of the Client;

 

(7)  the amalgamation, merger or reconstruction of the Company with any other person, or the sale or transfer by the Company of the undertakings, properties or assets of the Company in whole or in part to any other person;

 

(8)  any claim, set-off or other rights which the Client may have at any time against the Company or any other person;

 

(9)  any arrangements or compromises entered into by the Company with the Client or any other person;

 

(10) the illegality, invalidity or unenforceability of, or the defects in, any provision of any documents relating to the Facility, or any margins, guarantees or indemnities (including the Charge), or under any such documents or any margins or indemnities (including the Charge) and the related provisions, whether on the ground of ultra vires, being not in the interests of the relevant person or any person not having proper authorization, not duly executed or delivered or for any other reason;

 

 (11) any proceedings involving bankruptcy, insolvency or winding-up or any agreements, margins, guarantees, indemnities, payments or other transactions affected thereby; any Client relying on the releases, settlements or satisfactions of debts given or made by any such agreements, margins, guarantees, indemnities, payments or other transactions, and any such releases, settlements or satisfactions of debts will be deemed to be limited accordingly; or the things done or omitted or neglected to be done by the Company or any other person or any other dealings, facts, matters or things which, but for this provision, might operate to prejudice or affect the Client’s liabilities under the Margin Facility Terms.

 

 

8. The Standing Authority of Client Securities

 

8.1  The Standing Authority of Client Securities relates to the treatment of the Client’s Securities or Securities Collaterals.

 

8.2  The Client authorizes the Company to:

 

(1)  apply any of the Client’s Securities or Securities Collaterals pursuant to the securities borrowing and lending agreement;

 

(2)  deposit any of the Client’s Securities Collaterals with an authorized financial institution as collateral for financial accommodations provided by such institution to the Company;

 

(3)  deposit any of the Client’s Securities Collaterals with HKSCC as collateral for the performance of the Company’s settlement obligations and liabilities. The Client understands that HKSCC will create the first fixed charge over the Client’s Securities in accordance with the Company’s obligations and liabilities;

 

(4)  deposit any of the Client’s Securities Collaterals with any other recognized Clearing House or any other intermediary licensed or registered for dealing in securities as Collateral for the discharge and satisfaction of the Company’s settlement obligations and liabilities;

 

(5)  apply or deposit any of the Client’s Securities Collaterals in accordance with Clauses (1), (2), (3) and/or (4) above if the Company provides financial accommodations to the Client in the course of executing Securities Transactions and any other regulated activities for which the Company is licensed.

 

8.3  The Client acknowledges and agrees that the Company may do any of the things set out in Clauses 8.2 without giving notice to the Client.

 

8.4  The Client also acknowledges that:

 

(1)  the Standing Authority of Client Securities conferred to the Company does not prejudice the rights the Company may have In relation to dealing in the Client’s Securities or Securities Collaterals; and

 

(2)  the Standing Authority of Client Securities does not affect the Company’s right to dispose or cause to dispose of the Client’s Securities or Securities Collaterals in order to discharge the liability owed by or on behalf of the Client to the Company or third parties.

 

8.5  The Client understands that the Client’s Securities may be subject to the rights of third parties may have rights to, and the Company must            satisfy these rights in full before the Client’s Securities can be returned to the Client.

 

8.6 The Standing Authority of Client Securities is valid for a period of 12 months from the date of this Agreement, and may be renewed each time for 12 months in the following circumstances: (a) the Client agrees in written form to the renewal; (b) or the Company gives a written notice to the Client at least 14 days prior to the expiry of such authority, and the Client does not object to the renewal before the  expiry of such authority.

8.7  The Client may revoke the Standing Authority of Securities at any time by giving 30 days prior written notice to the Company.

 

 

9. Risk Disclosure

 

9.1  The Company requests the Client to refer to the “Risk Disclosure Statements” set out in Appendix 2 in the “Client Agreement of Securities Trading Accounts”.

 

9.2  The Client undertakes that the risk of loss in financing a transaction by deposit of Collateral may be significant. The Client is aware that he            may sustain losses in excess of his cash and any other assets deposited as Collateral with the Company.

 

9.3  The Client is also aware that market conditions may make it impossible to execute standby Instructions such as “stop-loss” or “stop-limit” Instructions. The Client may be called upon at short notice to make additional margin deposits or interest payments. If the required Margin deposits or interest payments are not made within the prescribed time, the Client’s Collateral may be liquidated without his consent.

 

9.4  The Client undertakes that he will be liable for any resulting deficit in his Account and the interest payable. As a result, the Client should       carefully consider whether such financing arrangement is suitable for him in light of his own financial position and investment objectives.

 

 

10. Client Money Standing Authority

 

10.1 Deposit any sum of monies into any segregated accounts which established and maintained by the Company or any members of the group within the Company (under the interpretation in “Companies Ordinance”)( “the Company Group”), may transfer to and between any of the segregated accounts, in order to discharge any obligations and liabilities owed by or on behalf of the Client to the Company Group, whether such obligations and liabilities are actual or contingent, primary or collateral, secured or unsecured, joint or several; and/or

 

10.2 Pay/transfer any sum of monies to Client’s securities account with the Company and/or any Hong Kong and/or overseas broker’s securities account and its successors and assignees, for the purposes of dealing in securities trading with Client or comply with settlement or margin requirement (if applicable); and/or

 

10.3 Pay/transfer any sum of monies to segregated accounts which established by the Company and to segregated accounts which established by Hong Kong and/or overseas broker and/or clearing house, and transfer to and between any of the segregated accounts; and/or

 

10.4 Convert monies into any currencies

 

10.5 The Client understands that his/her securities may be subject to liens of third parties and the return of such securities to the Client may be subject to the satisfaction of such liens. The Client acknowledges that the authorizations given hereunder shall not affect any other authorizations given to the Company or any rights which the Client may have in dealing with the securities or securities collateral in question, including the Company’s right to dispose such securities or securities collateral in settlement of any liability owed by or on behalf of the Client to the Company or a third person.

 

10.6 The authorizations given hereunder may be revoked by the Client giving the Company written notice at the address set out above or otherwise notified to the Client in writing. Such notice shall take effect upon the expiry of 14 days from the date of the Company actual receipt of such notice.

 

10.7 The Client understands that the authorizations given hereunder shall be valid for 12 months from the date hereof, subject to renewal.   The authorizations given hereunder shall be deemed to be renewed if the Company gives to Client a written reminder at least 14 days prior to the expiry date of the relevant authorizations, and the Client does not object to such deemed renewal before such expiry date.

 

10.8 This Agreement has been explained to the Client and the Client understands and agrees with its contents.

 

 

Appendix 1 Personal Information Collection Statement

 

This Statement is made by Solomon JFZ (Asia) Holdings Limited (hereinafter referred to as “the Company”) in accordance with the provisions of the Personal Data (Privacy) Ordinance of the Hong Kong Special Administrative Region (the “Ordinance”) for the purpose of illustration to the Client regarding the reasons and purposes of personal data collection as well as the ways for the Client to inspect with the Company the personal data collected. The terms referred to in this Statement shall have the same meanings as defined in the “Client Agreement”.

 

 

1. Collection of Personal Data

 

1.1  Except as specifically stated, the Client is required to provide to the Company from time to time the relevant personal data when the Client applies for or continues the services of the Company or establishes or renews the services the Company provides to the Client, or as a result of legal requirements or guidelines issued by regulatory or other authorities.

 

1.2  Failure on the part of the Client to provide such data may result in the Company not having adequate information to open, renew or manage the Account(s) for the Client or to comply with legal requirements or guidelines issued by regulatory or other authorities.

 

1.3  In the course of the Client’s continuation of his normal business operations with the Company, for example, when the Client applies for adding types of services or issues deposit, withdrawal and other instructions to the Company, the Company may also collect further information about the Client, including the information obtained legally from others institutions.

 

 

2. Use of Personal Data

 

2.1  Purposes

 

The Client understands, confirms and authorizes the Company to use all personal data provided by the Client to the Company in Section 1          above for the following purposes:

 

(1)  the daily operations involved in providing services to the Client;

     

(2)  conducting verification and credit check procedures for new or existing Clients, and assisting other financial institutions in conducting these works;

     

(3)  establishing and maintaining the Company’s risk management related standards;

     

(4)  on-going account management, including collection of debts and enforcement of guarantees, charges or other rights and interests;

     

(5)  designing the new products and services provided to the Client, or marketing products of the Company to the Client;

 

      (6)  any purposes relating to the execution of the Client’s Instructions or in connection with the business or dealings of the Company;

     

      (7)  comparing the Client’s personal data (irrespective of the purposes and sources for which such data are collected, and whether such data are collected from the User or any other person) for the purpose of:

 

            (a)  credit check;

             (b)  data verification;

             (c)   preparing or verifying data in order to take such actions as the User or any other person consider appropriate (including actions that may relate to the rights, obligations or interests of the Client or any other person);

     

(8)  promoting the following services or products (whether acted by the Company or by other third parties, and in the latter case, whether the Company accepts or pays commission in respect of the promotion):

                  

             (a)  promotion services and related products;

             (b)  seniority, rewards and benefits programs and related services and products;

             (c)   services and products provided by the commercial partners working with the Company;   

 

      (9)  services stipulated in any other agreements and terms of service in connection with the Client;

 

      (10) any purposes relating to compliance with any laws, regulations, court judgements or judgements of any other regulatory bodies;

     

(11) purposes relating to the above.

 

2.2 The Users

 

All personal data (whether provided by the Client or by other person; and whether these data are collected prior to or after the Client receives the “Client Agreement” of the Company) held by the Company relating to the Client will be kept confidential, provided that, to achieve the purposes      mentioned in Section 2.1 above, the Company may provide such data for use by the following companies or persons (each a “User”):

            

      (1)  (a)  any directors, officers, employees or agents of the Company;

                         

             (b)  any person authorized by the Company for executing the Client’s instructions and/or engaging in business of the Company (such as              lawyers, consultants, nominee, custodian, etc.);

                  

(c)   any actual or proposed transferee of the Company holding any rights and obligations associated with the Client, or participant or sub-participant or transferee of the Client rights of the Company;

 

      (2)  business partners co-operating with the Company;

     

(3)  any agent, contractor or third-party service provider who provides to the Company administrative, telecommunications, computer, payment or securities clearing or other services in connection with the operation of the Company’s business;

     

(4)  any person who owes a duty of confidentiality to the Company, which have undertaken to keep such information confidential;

     

(5)  any person making payment into the Client’s account (the deposit receipt, if provided, may contain the name of the Client);

     

(6)  credit reference agencies, and, in the event of default of payment on the part of the Client, provide such data to the debt collection agencies;

     

(7)  other third-party service providers employed by the Company in order to achieve the purposes mentioned in Section 2.1 above;

 

(8)  any government agencies, regulatory bodies or other organizations or bodies (whether pursuant to the requirements under the laws or regulations applicable to the Company).

 

For the benefit of the Client, the personal data provided by the Client may be transferred to any places outside Hong Kong.

 

2.3 Use and transfer of data in direct marketing

 

(1)  In addition to the purposes listed in Section 2.1, the Company will use the Client’s personal data for direct marketing purposes, including          finance, investment and financial information, products and services, but will first obtain the Client’s consent.

     

      (2)  In addition to the use of the Clients’ personal data for direct marketing as mentioned above, the Company will also provide the Client’s personal data to any third-party service providers for direct marketing of finance, investment and financial information, products and services, but will first obtain the Client’s written consent.

     

      (3)  If the Client does not want the Company to use and/or provide his personal data for direct marketing purposes, the Client may at any time request the Company to stop using/providing the Clients’ personal data.

     

 

3. Rights of Access, Correction and Refusal

 

3.1  According to the Ordinance, the Client has the right to access to and correct the Client’s personal data. In general, subject to certain    waivers, the Client shall be entitled to:

 

(1)  enquire whether the Company holds personal data in relation to the Client;

     

(2)  access to the Client’s personal data within reasonable time; the Company will response to the Client in a reasonable manner and in an intelligible form, but a reasonable fee shall be charged;

     

(3)  request the Company to correct any inaccurate personal data of the Client;

     

(4)  ascertain the Company’s policies and practices in relation to the data and be informed of the types of personal data held by the Company;

     

(5)  in relation to personal credit, request to be informed which data will be routinely disclosed to credit reference agencies or debt collection agencies, and to be provided with further information to enable the making of an access and correction request to the relevant credit reference agency or debt collection agency;

     

(6)  if the Client’s request for access or correction of personal data is refused, request to be given reasons thereof and object to any such refusals.

 

3.2  If the Client does not wish to receive the services and related information provided by the Company or if he wishes to withdraw the above consent, he may notify the Company.

            

 

4. Client Consent under the Hong Kong Investor Identification Regime (HKIDR) and Over-the-counter Securities Transactions Reporting Regime (OTCR)

 

(a)  disclosing and transferring your personal data (including CID and BCAN(s)) to the Stock Exchange of Hong Kong (SEHK) and/or the Securities and Futures Commission (SFC) in accordance with the rules and requirements of SEHK and the SFC in effect from time to time;

 

(b)  allowing SEHK to: (i) collect, store, process and use your personal data (including CID and BCAN(s)) for market surveillance and monitoring purposes and enforcement of the Rules of the Exchange of SEHK; and (ii) disclose and transfer such information to the relevant regulators and law enforcement agencies in Hong Kong (including, but not limited to, the SFC) so as to facilitate the performance of their statutory functions with respect to the Hong Kong financial markets; and (iii) use such information for conducting analysis for the purposes of market oversight; and

 

(c)   allowing the SFC to: (i) collect, store, process and use your personal data (including CID and BCAN(s)) for the performance of its statutory functions including monitoring, surveillance and enforcement functions with respect to the Hong Kong financial markets; and (ii) disclose and transfer such information to relevant regulators and law enforcement agencies in Hong Kong in accordance with applicable laws or regulatory requirements.

 

You also agree that despite any subsequent purported withdrawal of consent by you, your personal data may continue to be stored, processed, used, disclosed or transferred for the above purposes after such purported withdrawal of consent. Failure to provide us with your personal data or consent as described above may mean that we will not, or will no longer be able to, as the case may be, carry out your trading instructions or provide you with securities related services (other than to sell, transfer out or withdraw your existing holdings of securities, if any).

 

Note: The terms “BCAN” and “CID” used in this clause shall bear the meanings as defined in paragraph 5.6 of the Code of Conduct for Persons Licensed by or Registered with the Securities and Futures Commission.”

 

 

Appendix 2 Risk Disclosure Statement

 

 

The following risk disclosure statements do not disclose or discuss all the risks or other important factors. Given the risks involved, Client should enter into transactions only after Client has understood the nature of the transactions, the contractual relationships Client is going to enter into as well as the nature and extent of the risks Client shall take. Client should also consider whether the transactions are suitable to Client in light of Client’s investment experience, objectives, financial resources and other relevant factors or conditions. Notwithstanding the general risk warnings made by the Company, the Company does not and may not be deemed as Client’s financial advisor. Client should consult his/her independent legal, tax and financial advisors before entering into any transactions.

 

 

1. Risk of Securities Transactions

 

The prices of securities fluctuate, sometimes dramatically. The price of a security may move up or down, and may become valueless. It is as likely to incur losses as to gain profits when buying and selling securities. Client should understand the risks of investment in stock market before they make investment decisions. Client shall also assess their abilities and willingness in assuming such risks. Client is also advised to seek the independent financial advice if he wishes.

 

 

2. Risk of Securities Trading (Margin Client)

 

This risk of loss in financing a transaction by deposit of collateral is significant. Client may sustain losses in excess of their cash and any other assets deposited as collateral with the Company. Market conditions may make it impossible to execute contingent orders, such as “stop-loss” or “stop-limit” orders. Client may be called upon at short notice to make additional margin deposits or interest payments. If the required margin deposits or interest payments are not made within the prescribed time, Client’s collateral may be liquidated without their consent. Moreover, Client will remain liable for any resulting deficit in their account and interest charged on their account. Client should therefore carefully consider whether such a financing arrangement is suitable in light of their own financial position and investment objectives.

 

 

3. Risk for Trading Growth Enterprise Market Stocks (GEM)

 

Growth Enterprise Market (GEM) stocks involve a high investment risk. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. GEM stocks may be varied volatile and illiquid. Client should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors. Current information on GEM stocks may only be found on the internet website operated by The Stock Exchange of Hong Kong Limited. GEM Companies are usually not required to issue paid announcements in gazette newspapers. Client should seek independent professional advice if client is uncertain of or has not understood any aspect of this risk disclosure statement or the nature and risks involved in trading of GEM stocks.

 

 

4. Risks Involved in Trading Derivative Warrants

 

4.1 Issuer default risk

 

In the event that a structured product issuer becomes insolvent and defaults on their listed securities, Client will be considered as unsecured creditors and will have no preferential claims to any assets held by the issuer. Client should therefore pay close attention to the financial strength and credit worthiness of structured product issuers.

 

Note: “Issuers Credit Rating” showing the credit ratings of individual issuers is now available under the Issuer and Liquidity Provider Information sub-section under Derivative Warrants and under CBBCs section on the HKEx corporate website.

 

4.2 Uncollateralized product risk

 

Uncollateralized structured products are not asset backed. In the event of issuer bankruptcy, Client can lose client’s entire investment. Client should read the listing documents to determine if a product is uncollateralized.

 

4.3 Foreign exchange risk

 

Investors trading structured products with underlying assets not denominated in Hong Kong dollars are also exposed to exchange rate risk. Currency rate fluctuations can adversely affect the underlying asset value, also affecting the structured product price.

 

4.4 Gearing Risk

 

Although derivative warrants may cost a fraction of the price of the underlying assets, a derivative warrant may change in value more or less rapidly than the underlying asset. In the worst case the value of the derivative warrants falls to zero and holders lose their entire investment amount.

 

4.5 Expiry Considerations

 

Derivative products have an expiry date after which the issue may become worthless. Investors should be aware of the expiry time horizon and choose a product with an appropriate lifespan for their trading strategy.

 

4.6 Time Decay

 

One should be aware that other factors being equal the value of derivative warrants will decrease over time. Therefore, derivative warrants should never be viewed as products that are bought and held as long-term investments.

 

4.7 Volatility

 

Other factors being equal an increase in the volatility of the underlying asset should lead to a higher warrant price and a decrease in volatility lead to a lower derivative warrant price.

 

4.8 Extraordinary Price Movements

 

The price of a derivative product may not match its theoretical price due to outside influences such as market supply and demand factors. As a result, actual traded prices can be higher or lower than the theoretical price.

 

4.9 Liquidity Risk

 

Although derivative warrants have liquidity providers, there is no guarantee that investor will be able to buy/sell derivative warrants at their target prices any time they wish.

 

 

5. Risk Involved in Trading Callable Bull/Bear Contracts (“CBBC”)

 

5.1 Mandatory call risk

 

CBBC are not suitable for all investors and investors shall consider their risk appetite prior to trading. A CBBC may be called by the issuer when the price of the underlying asset hits the Call Price and that CBBC will expire early. Payoff for Category N CBBC will be zero when they expire early. When Category R CBBC expire early the holder may receive a small amount of Residual Value payment, but there may be no Residual Value payment in adverse situations. Once the CBBC is called, even though the underlying asset may bounce back in the right direction, the CBBC which has been called will not be revived and investors will not be able to profit from the bounce-back.

 

5.2 Gearing effects

 

Since a CBBC is a leverage product, the percentage change in the price of a CBBC is greater compared with that of the underlying asset. Investors may suffer higher losses in percentage terms if they expect the price of the underlying asset to move one way but it moves in the opposite direction.

 

5.3 Expiry Considerations

 

A CBBC has a limited lifespan of three months to five years. The life of a CBBC may be shorter if called before the fixed expiry date. The price of a CBBC fluctuates with the changes in the price of the underlying asset from time to time and may become worthless after expiry and in certain cases, even before the normal expiry if the CBBC has been called early.

 

5.4 Movement with underlying asset

 

Although the price changes of a CBBC tends to follow closely the price changes of its underlying asset, but in some situations, it may be (i.e., delta may not always be close to one). Prices of CBBC are affected by a number of factors, including its own demand and supply, funding costs and time to expiry.

 

5.5 Liquidity

 

Although CBBC have liquidity providers, there is no guarantee that investors will be able to buy/sell CBBC at their target prices any time they wish.

 

5.6 Funding costs

 

The issue price of a CBBC includes funding costs charged upfront for the entire period from launch to normal expiry. When a CBBC is called, the CBBC holders (investors) will lose the funding cost for the remaining period even though the actual period of funding for the CBBC turns out to be shorter. Investors should also note that the funding costs of a CBBC after launch may very during its life.

 

5.7 Trading of CBBC close to Call Price

 

When the underlying asset is trading close to the Call Price, the price of a CBBC may be more volatile with wider spreads and uncertain liquidity. CBBC may be called at any time and trading will terminate as a result. However, the trade inputted by the investor may still be executed and confirmed by the investors after the Mandatory Call Event (“MCE”) since there may be some time lapse between the MCE time and suspension of the CBBC trading. Any trades executed after the MCE will not be recognized and will be cancelled. Therefore, investors should be aware of the risk and ought to apply special caution when the CBBC is trading close to the Call Price.

 

 

6. Risk Associated with Exchange Traded Funds (“ETFs”)

 

6.1 Counterparty risk

 

Synthetic ETFs are subject to counterparty risk associated with the derivatives issuers and may suffer losses if the derivatives issuers default or fail to honour their contractual commitments. Further, potential contagion and concentration risks of the derivative issuers should be taken into account (e.g., since derivative issuers are predominantly international financial institutions, the failure of one derivative counterparty of a synthetic ETF may have a “knock-on” effect on the other derivative counterparties of the synthetic ETF). Although synthetic ETFs have collateral from their counterparties, it may not completely remove the counterparty’s risk so they are still subject to the collateral providers fulfilling their obligations. There is a further risk when the right against the collateral is exercised because the market value of the collateral could be substantially less than the amount secured, resulting in significant losses to the ETF.

 

6.2 Market risk

 

ETFs are exposed to the economic, political, currency, legal and other risk of a specific sector or market related to the index that it is tracking. ETF managers do not have the discretion to take defensive positions in declining markets. Investors must be prepared to bear the risk of loss and volatility associated with the underlying benchmarks.

 

6.3 Tracking error risk

 

Tracking error is the difference between the performance of an ETF and its underlying benchmark. Tracking error can arise due to factors such as the impact of the Total Expense Ratio (TER), changes in the composition of the underlying benchmark and type of ETF (e physical vs synthetic). The TER of an ETF may include management fee and other fees and costs (e.g. transaction costs, stamp duties, costs for preparing financial reports and other prescribed documentation, legal and auditing fees, insurance costs, fees for custody services, etc.) – there is no universal definition. An ETF’s estimated TER is stated in the prospectus. The estimated TER of an ETF does not necessarily represent the fund’s tracking error because the fund’s Net Asset Value (“NAV”) may be affected by other factors, e.g. dividends and other income from the portfolio, and in the case of a synthetic ETF, the indirect costs borne by the fund may only be reflected in the market value of the derivatives it holds.

 

6.4 Risk in trading at a discount or premium

 

The market price of an ETF may be at a discount or premium to its NAV. This price discrepancy is caused by supply and demand factors and may be more likely to emerge during periods of high market volatility and uncertainty. The phenomenon may also be observed in ETFs tracking specific markets or sectors that are subject to direct investment restrictions. As a result, investors who buy at a premium may suffer losses even if the NAV is higher when they sell and they may not fully recover their investment in the event of termination of the ETF.

 

6.5 Liquidity Risk

 

Although ETFs usually have market makers (known as Securities Market Makers “SMMs”) to help provide liquidity, there is no assurance that active trading will be maintained at all times. In the event that the SMMs are unable to fulfil their obligations, investors may not be able to buy or sell the ETF or may find the market price of the ETF is at a discount or premium to its NAV.

 

6.6 Stock lending risk

 

Physical ETFs which engage in stock lending face the risk of the borrower not returning the ETF’s securities as agreed and thus may experience some losses due to their stock lending.

 

6.7 Foreign exchange risk

 

Investors trading structured products with underlying assets not denominated in Hong Kong dollars are also exposed to exchange rate risk. Currency rate fluctuations can adversely affect the underlying asset value, also affecting the structured product price.

 

6.8 Counterparty risk involved in ETFs with different replication strategies

 

Full replication and representative sampling strategies

 

An ETF using a full replication strategy generally aims to invest in all constituent stocks/assets in the same weightings as its benchmark. ETFs adopting a representative sampling strategy will invest in some, but not all of the relevant constituent stocks/assets. For ETFs that invest directly in the underlying assets rather than through synthetic instruments issued by third parties, counterparty risk tends to be less of concern.

 

Synthetic replication strategies

 

ETFs utilizing a synthetic replication strategy use swaps or other derivative instruments to gain exposure to a benchmark. Currently, synthetic replication ETFs can be further categorized into two forms:

 

(a)  Swap-based ETFs

      (1)  Total return swaps allow ETF managers to replicate the benchmark performance of ETFs without purchasing the underlying assets.

(2)  Swap-based ETFs are exposed to counterparty risk of the swap dealers and may suffer losses if such dealers default or fail to honour their Contractual commitments.

 

(b)  Derivative embedded ETFs

      (1)  ETF managers may also use other derivative instruments to synthetically replicate the economic benefit of the relevant benchmark. The derivative instruments may be issued by one or multiple issuers.

(2)  Derivative embedded ETFs are subject to counterparty risk of the derivative instruments’ issuers and may suffer losses if such issuers default or fail     to honour their contractual commitments.

            

Even where collateral is obtained by an ETF, it is subject to the collateral provider fulfilling its obligations. There is a further risk that when the right against the collateral is exercised, the market value of the collateral could be substantially less than the amount secured resulting in significant loss to the ETF.

     

It is important that investors understand and critically assess the implications arising due to different ETF structures and characteristics.

 

6.9 Risks Relating to Leveraged & Inverse (“L&I Products”)

 

L&I Products are different from conventional ETFs. They do not share the same characteristics and risks as conventional ETFs.

 

 

7. Risk Disclosure Statement for Renminbi Products

 

Investor should consider the following Risk Factors when investing in renminbi products ：

 

7.1Currency risk

 

Investors are subject to the risk of renminbi depreciation if Investor intend to convert any renminbi-denominated redemption or sale proceeds into another currency, as renminbi is a restricted currency and subject to exchange controls.

 

7.2 Currency conversion

 

In any event that currency conversion is required, the Company shall determine a rate of exchange to be the prevailing market rate of exchange between the Relevant currencies. For any transactions closed out or otherwise liquidated, the Company shall debit or credit the relevant accounts in the currency in which the relevant accounts are denominated at a rate of exchange determined by the Company to be the prevailing market rate of exchange between the relevant currencies. Any risks, costs, profits and losses arising as a result of fluctuations in the exchange rates between the relevant currencies shall be entirely binding on the Client.

 

7.3 Possibility of not receiving renminbi upon redemption or sale of renminbi investments

 

Client should always understand the nature and terms of a product and read the offering documents carefully before investing to find out whether Client will actually receive renminbi when Client redeems or sells the renminbi products. Even if the product aims to deliver renminbi, it may not be able to pay Client in renminbi if the product has to sell non-renminbi-denominated investments to meet Client’s redemption/ sale request, and encounters conversion restriction when converting the proceeds in non-renminbi currencies into renminbi.  On the other hand, even if the investments are denominated in renminbi, there may not be sufficient renminbi to satisfy the redemption or sale requests due to the repatriation or other controls on renminbi. As a result, Client may not receive renminbi when Client redeems or sells his investments.

 

7.4 Liquidity risk

 

Renminbi products are subject to liquidity risk as renminbi products are a new type of product and there may not be regular trading or an active secondary market. Therefore, Client may not be able to sell his investment in the product on a timely basis, or Client may have to sell the product at a deep discount to its value. In addition, Client should also find out whether the renminbi product is subject to any minimum investment period or early redemption or termination fines or charges.

 

7.5 Investment / market risk

 

Like any investments, renminbi products are subject to investment risk and may not be principal protected, i.e. the assets that the products invest in or referenced to may fall as well as rise, resulting in gains or losses to the product.

 

7.6 Issuer / counterparty credit risk

 

Renminbi products are subject to the credit and insolvency risks of their issuers.  Client shall consider carefully the creditworthiness of the issuers before investing. Furthermore, as a renminbi product may invest in derivative instruments, counterparty risk may also arise as the default by the derivative issuers may adversely affect the performance of the renminbi products and result in substantial losses.

 

Depending on the nature of the renminbi product and its investment objective, there may be other risk factors specific to the product which Client shall consider.  Before making an investment decision, Client should always read the risk factors as set out in the offering documents and seek independent professional advice where necessary.

 

 

8. Risk associated with Bonds

 

8.1Price of a Debt Security

 

If investors wish to buy and sell their bonds prior to maturity, they should be aware of the potential fluctuations in debt prices. Similar to other types ofsecurities, bond prices fluctuate in response to the forces of supply and demand.

 

8.2 Interest Rate

 

The price of a fixed rate debt security usually moves in a direction opposite of market interest rates. If interest rates go up, the price of the debt security will other factors being equal, go down, thereby increasing the current yield.

 

8.3 Credit Rating

 

Investors should note that the payment of the interest and the repayment of the principal are subject to the credit risk associated with the issuer or the guarantor.

 

 

8.4 Overall market condition

 

As with all investments, returns on a debt security are influenced by factors such as the rate of inflation, unemployment rate, economic growth, balance of payments data, retail sales, industrial production and political changes, etc.

 

8.5 Exchange Rate Risk

 

For a bond denominated in a currency other than Hong Kong dollars, Hong Kong investors may suffer losses due to change in exchange rates.

 

8.6 Liquidity Risk

 

In Hong Kong, investors tend to buy and hold bonds until their maturity.  Therefore, liquidity for many bonds in the secondary market may be low.

 

8.7 Bond Issue Terms

 

It is Important that investors pay attention to the terms of the issue, e.g. a bond may be redeemed/called before maturity.

 

 

9. Risk of Providing an Authority to Repledge Client’s Securities Collateral etc.

 

(1)  There is risk if Client provides the Company with an authority that allows the Company to apply Client’s securities or securities collateral pursuant to a securities borrowing and lending agreement, re-pledge Client’s securities collateral for financial accommodation or deposit client’s securities collateral as collateral for the discharge and satisfaction of our settlement obligations and liabilities.

 

(2)  If Client’s securities or securities collateral are received or held by the Company in Hong Kong, the above arrangement is allowed only if Client consents in writing. Moreover, unless Client is not a professional investor, Client’s authority must specify the period for which it is current and be limited to not more than 12 months. If Client is a professional investor, these restrictions do not apply.

 

(3)  Additionally, Client’s authority may be deemed to be renewed (i.e. without Client’s written consent) if the Company issue Client a reminder at least 14 days prior to the expiry of the authority, and Client do not object to such deemed renewal before the expiry date of Client’s then existing authority.

 

(4)  Client is not required by any law to sign these authorities. But an authority may be required by the Company, for example, to facilitate margin lending to Client or to allow Client’s securities or securities collateral to be lent to or deposited as collateral with third parties. We should explain to Client the purposes for which one of these authorities is to be used.

 

(5)  If Client signs one of these authorities and Client’s securities or securities collateral are lent to or deposited with third parties, those third parties will have a lien or charge on Client’s securities or securities collateral. Although the Company are responsible to Client for Client’s securities or securities collateral lent or deposited under Client’s authority, a default by the Company could result in the loss of Client’s securities or securities collateral.

 

(6)  A cash account not involving securities borrowing and lending is available from most licensed or registered persons (including the Company). If Client do not require margin facilities or do not wish Client’s securities or securities collateral to be lent or pledged, do not sign the above authorities and ask to open this type of cash account.

 

 

10.Risk of Trading of Foreign Securities

 

Client acknowledges that transactions on markets in other jurisdictions, including markets formally linked to a domestic market, may expose Client to additional risk. Such markets may be subject to regulations which may offer different or diminished investor protection. Before Client trades, Client should enquire about any rules relevant to Client’s particular transactions. Client understands that our local regulatory authority will be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where Client’s transactions have been effected.

 

10.1 Exchange Risk

 

The profit or loss in transactions in foreign currency-denominated securities (whether they are traded in the client’s own or another jurisdiction) will be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.

 

10.2 Risk of Off-exchange Transactions

 

In some jurisdictions, and only then in restricted circumstances, the Company is permitted to effect off-exchange transactions. The Company may be acting as the Client’s counterparty to the transaction. It may be difficult or impossible to liquidate an existing position, to assess the value, to determine a fair price or to assess the exposure to risk. For these reasons, these transactions may involve increased risks. Off-exchange transactions may be less regulated or subject to a separate regulatory regime. Before Client undertakes such transactions, Client should familiarize himself with applicable rules and attendant risks.

 

 

11. Specific risks relating to Securities Trading through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect

 

The following risk disclosure statements cannot disclose all the risk which China Connect involved. The Client should undertake its own research and study before its trade or invest. The Client should carefully consider whether trading or investment is suitable in light of its own financial position and investment objective. The Client is advised to seek independent financial and professional advice before you trade or invest. You should seek independent professional advice if the Client is uncertain of or has not understood any aspect of the following risk disclosure statements or the nature and risks involved in trading or investment.

 

11.1 Not protected by Investor Compensation Fund

 

Investor should note that any Northbound or Southbound trading under China Connect will not be covered by Hong Kong’s Investor Compensation Fund. Hong Kong’s Investor Compensation Fund is established to pay compensation to investors of any nationality who suffer pecuniary losses as a result of default of a licensed intermediary or authorized financial institution in relation to exchange-traded products in Hong Kong. Examples of default are insolvency, in bankruptcy or winding up, breach of trust, defalcation, fraud, or misfeasance. As far as Southbound trading is concerned, since Mainland securities brokers are neither licensees nor registered institutions with the Securities and Futures Commission (SFC) in Hong Kong and they are not regulated by the SFC, the Investor Compensation Fund will not cover Southbound trading via China Connect. As for Northbound trading, according to the Securities and Futures Ordinance, the Investor Compensation Fund will only cover products traded in Hong Kong’s recognized securities market (SEHK) and recognized futures market (Hong Kong Futures Exchanged Limited, HKFE.) Since default matters in Northbound trading via China Connect do not involve products listed or traded in SEHK or HKFE, so similar to the case of investor trading overseas securities, they will not be covered by the Investor Compensation Fund. On the other hand, according to the Measures for the Administration of Securities Investor Protection Fund 《證券投資者保護基金管理辦法》, the functions of China Securities Investor Protection Fund (CSIPF, 中國投資者保護基金) include “indemnifying creditors as required by China’s relevant policies in case a securities company is subjected to compulsory regulatory measures including dissolution, closure, bankruptcy and administrative take over by China Securities Regulatory Commission (CSRC) and custodian operation” or “other functions approved by the State Council”. As far as Hong Kong investors participating in Northbound trading are concerned, since they are carrying out northbound trading through securities brokers in Hong Kong and these brokers are not Mainland brokers, therefore they are not protected by CSIPF on the Mainland.

 

11.2 Quotas used up

 

When the respective aggregate quota balance for Northbound and Southbound trading is less than the daily quota, the corresponding buy orders will be suspended on the next trading day (sell orders will still be accepted) until the aggregate quota balance returns to the daily quota level. Once the daily quota is used up, acceptance of the corresponding buy orders will also be immediately suspended and no further buy orders will be accepted for the remainder of the day. Buy orders which have been accepted will not be affected by the using up of the daily quota, while sell orders will be continued to be accepted. Depending on the aggregate quota balance situation, buying services will be resumed on the following trading day.

 

11.3 Trading Days

 

China Connect will only operate on days when both markets are open for trading and when banks in both markets are open on the corresponding settlement days. So, it is possible that there are occasions when it is a normal trading day for the Mainland market but Hong Kong investors cannot carry out any A-share trading. Investor should take note of the days China Connect is open for business and decide according to his/ her own risk tolerance capability whether or not to take on the risk of price fluctuations in A-shares during the time when China Connect is not trading.

 

11.4 Restrictions on selling imposed by front-end monitoring

 

Investor must ensure he/ she has sufficient shares in their accounts opened with the Company when placing sell orders for trading Shanghai Stock Exchange or Shenzhen Stock Exchange Securities. If the shares are kept in an account opened with another Exchange Participant or a custodian, he/ she must first transfer the shares to the Company on T-1in order to sell their shares on T day.

 

11.5 The recalling of eligible stocks and trading restrictions

 

When a stock is recalled from the scope of eligible stocks for trading via China Connect for above-mentioned reasons, the stock can only be sold but restricted from being bought. This may affect the investment portfolio or strategies of the investor. He/ she should therefore pay close attention to the list of eligible stocks as provided and renewed from time to time by SSE and SEHK.

 

11.6 Currency risks

 

Hong Kong and overseas investor who holds a local currency other than RMB will be exposed to currency risk if he/she invests in a RMB product due to the need for the conversion of the local currency into RMB. During the conversion, Investor will also incur currency conversion costs. Even if the price of the RMB asset remains the same when you purchase it and when you redeem / sell it, you will still incur a loss when you convert the redemption / sale proceeds into local currency if RMB has depreciated.

 

11.7 Trading and settlement currency

 

Northbound investments in SSE securities will be traded and settled in Renminbi; the Company can offer currency exchange services to Northbound trading investors. For calculating any debit balance due from the Investor,

 

(i)   The exchange rate shall be determined by the Company in its sole discretion, with reference to the prevailing rates in the foreign exchange market;

(ii) Any conversion from one currency into another may be effected by the Company in such manner and at such times as it may in its absolute discretion;

(iii)  The costs of conversion and any loss arising as a result of fluctuations in the exchange rate of the relevant currency will be entirely for the account and risk of the Investor; and

(iv)  Investor authorizes the Company to debit his/ her Account for any expenses incurred in effecting any currency conversion.

 

11.8 Applicable Law and Regulations

 

All Transaction executed in the China Connect shall be subject to the regulations used by China Securities Regulatory commission (CSRC) and the Securities and Futures Commission (SFC) of Hong Kong. Investor agrees to do such things as the Company may require to ensure compliance with all relevant or applicable laws, rules, regulations, by-laws, constitution, orders, directives, notices, circulars, coded, customs, usages (whether of government bodies, authorities, exchange, market, clearing house or settlement system, and whether or not having the force of law)

 

11.9 Disclosure of Information

 

Under the current PRC rules, when Investor holds or controls up to 5% of the issued shares of a Mainland listed company, the investor is required to report in writing to CSRC and the relevant exchange, and inform the listed company within three working days. Investor is not allowed to continue purchasing or selling shares in the listed company during the three days. And every time when a change in his shareholding reaches 5%, the investor is required to make a disclosure within three working days. From the day the disclosure obligation arises to two working days after the disclosure is made, the investor may not buy or sell the shares in the relevant Mainland listed company. If a change in shareholding is less than 5% but results in the shares held or controlled by him falling below 5% of the relevant Mainland listed company, the investor is required to disclose the information within three working days.

 

11.10 Taxes and Other Payments

 

Investor trading SSE or SZSE Securities under China Connect will be subject to SSE s Handling Fee and Securities Management Fee, together with ChinaClear’s “Transfer Fee” Investor should note that certain existing CCASS fees still apply, including stock settlement fee for settlement instructions and money settlement fee. Subject to the SFC's approval, HKSCC will also impose a “New CCASS fee” (in HKD), called “Portfolio Fee”, on its CCASS Participants for providing depository and nominee services for their SSE Securities held in CCASS. The New CCASS Fee will be collected on a monthly basis. Besides, taxes imposed by the State Administration of Taxation (SAT), including stamp duty and dividend tax will also be applied to the Northbound trades and SSE or SZSE Securities acquired through China Connect. Any additional tax imposed by the SAT, if applicable, will be subject to further clarification with SAT.

 

 

12. Risk of providing an Authority to holdmail or to direct mail to third parties

 

If Client provide the licensed or registered person with an authority to hold mail or to direct mail to third parties, it is important for Client to promptly collect in person all contract notes and statements of Client’s account and review them in detail to ensure that any anomalies or mistakes can be detected in a timely fashion.

 

 

13. Risk Disclosure Statements for Using Electronic Trading

 

Client acknowledges that electronic trading facilities are supported by computer-based component systems for the order-routing, execution, matching, registration or clearing of trades. As with all facilities and systems, they are vulnerable to temporary disruption of failure. Client acknowledges that client’s ability to recover certain losses may be subject to limits on liability imposed by the system provider, the market, the clearing house and/or particular firms.

 

Client understands that trading on one electronic trading system may differ from trading on other electronic trading systems. Access to the internet or other electronic devices may be limited or unavailable during periods of peak demand, market volatility, systems upgrade or maintenance or other times. Transactions conducted through the internet or other electronic devices may be subject to interruption, transmission blackout, and delayed transmission due to unpredictable traffic congestion and other reasons beyond control. Due to technical limitation, internet is an inherently unreliable medium of communication. As a result of such unreliability, there may be delays in the transmission and receipt of the instructions and other information, which may result in delays in the execution of instructions or the execution of instructions at prices different from those prevailing prices at the time the instructions were given. Client acknowledges that if client undertakes transactions on an electronic trading system, client 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 client order is either not executed according to his instructions or is not executed at all and that once given, an instruction is usually noncancelable.

 

When transmitting data and communications through wireless communications medium (such as mobile phones and other mobile terminals), due to the open nature of wireless communication medium, any transfers conducted through such medium are likely to be subject to interruption, security failure, transmission blackout and delayed transmission as a result of the traffic of wireless communication medium or incorrect data transmission, and client shall take his own risks involved in using this type of transmission or communication. Client also acknowledges and agrees that transmitting information, instructions and communications through wireless communication medium may be delayed, and client shall take all risks associated therewith.

 

 

Appendix 3 Electronic Service Agreement

 

 

This “Electronic Service Agreement” is supplemental to the “Client Agreement” entered into between Solomon JFZ (Asia) Holdings Limited (“the Company”) and the Client to which this “Electronic Service Agreement” is annexed, whereby the Company agrees to provide to the Client electronic services which enables the Client to give electronic Instructions and to obtain quotations and other information via computer or any other electronic communication and on compatible personal, home or small business computers, including internet appliance with modems, terminals or network computers that can connect to a telecommunication network (“Electronic Services”). Where any conflict arises between the “Client Agreement” and the provisions of this “Electronic Service Agreement”, the provisions of the latter shall prevail.

 

 

1. Definitions

 

1.1  Terms in this “Electronic Service Agreement” shall have the same meanings as defined in the “Client Agreement” unless otherwise stated.

 

1.2  The following expressions shall, unless the context requires otherwise, have the following meanings:

     

“Login ID” means the name used to identify the Client’s identification, which shall be used in conjunction with the Password to gain access to the Electronic Services;

 

“Information” means any Transaction or market data, bid and ask quotations, news reports, analysts’ reports, research and other information;

 

“Password” means the Client’s password for login, which shall be used in conjunction with the Login ID to gain access to the Electronic         Services.

 

1.3  References to “Instructions” in the “Client Agreement” shall deemed to include the electronic Instructions given through Electronic Services.

 

1.4  “Transaction Notices and Statements” and “Notices and Communications” referred to in the “Client Agreement” respectively may be sent solely through Electronic Services if the Client so consents; such consent may be indicated initially in the Account Opening Form or subsequently through Electronic Services. Notices and communications sent through Electronic Services will be deemed to have been properly given at the time of transmission.

 

 

2. Use of Electronic Services

 

2.1  The Client will be given a Login ID and Password upon successful account opening with the Company, and the Electronic Services will be activated accordingly. The Company shall be entitled to request the Client to, upon the Company’s notice from time to time, deposit cash or securities (as the case may be) prior to the execution of any of his Instructions.      

 

2.2  The Client confirms that only the Client himself shall be the sole authorized user of the Electronic Services of the Company, and that he is          required to use the correct identity to login to the Electronic Services.

 

2.3  The Client shall be responsible for the confidentiality and use of his Login ID and Password. Upon the correct input of the code for the Client’s account, the Company is authorized (but not obligated) to act, in its absolute discretion, on any Instruction it has received from the relevant Client without any liability to verify the validity and/or authenticity of such Instruction;

 

2.4  The Client shall immediately inform the Company if he becomes aware of any losses, theft or unauthorized use of his Login ID or Password.

 

2.5  The Company has the right (but not obligated) to suspend the Electronic Services if an incorrect combination of Login ID and Password has             been entered for more than 3 times.

 

2.6  If the Client uses the Electronic Services through computer, the Client agrees to provide the Company with the Client’s e-mail address, to promptly inform the Company of any changes to the Client’s e-mail address, and to receive electronic communications from the Company at the e-mail address the Client has specified.

 

2.7  The Client agrees to be bound by any notices, statements, trade confirmations and other communications provided by the Company to the Client through Electronic Services.

 

2.8  The Client agrees to pay all subscription fees, service fees and user fees (if any) that the Company charges for the Electronic Services and authorizes the Company to debit such fees from the Client’s Account.

 

2.9 The Company has the absolute discretion to limit the types and price ranges of the Instructions that may be given via the Electronic Services.

 

2.10      Upon giving Instructions via the Electronic Services, the Client shall check via the Electronic Services whether the Instructions given have been correctly confirmed by the Company. The Client agrees that the Instruction confirmations he receives do not guarantee that the Instructions will be executed. If the Client has not received an Instruction confirmation within 5 minutes following his entering of the Instructions into the Electronic Services, or if the Instruction confirmation received is incorrect, the Client shall immediately contact the Company to confirm whether the Company has received the Instructions. The Client further agrees that his non-receipt of the Instruction confirmations do not necessarily mean that his Instructions will not be executed by the Company. If the Company confirms to the Client that his Instruction has been executed but did not send a confirmation for receipt of the Instruction, the Client shall still be responsible for settling the Transaction.

 

2.11  Without limiting the generality of the foregoing, the Client acknowledges and agrees that it may not be possible to revise or cancel an Instruction once it has been given through the Electronic Services, and that an Instruction may only be revised or cancelled if it has not been executed by the Company. In such circumstances, the Company will use its best efforts to revise or cancel the Instruction, provided that even if the Company has confirmed the relevant Instruction of revision or cancellation, there is no guarantee that the revision or cancellation will occur. If the revision or cancellation does not occur, Client shall remain liable for the original Instruction.

 

2.12  If the Electronic Services are not available, the Client shall give Instructions in accordance with the provisions of the “Client Agreement”.

 

 

3. Information and Intellectual Properties

 

3.1  The Company may convey Information to the Client through Electronic Services. The Client may be charged a fee for the Information that is obtained from the Exchange, markets and third parties that transmit Information and provided for use by the Client. The Client authorizes the Company to debit such fee (if any) from the Client Account.

 

3.2  The Information is the property of the Company; the Information providers or other persons is protected by copyright. The Client shall not use the Information or any part thereof other than for his own purposes or in the ordinary course of its own business.

 

3.3  The Client agrees that he will not:

(1)  reproduce, re-transmit, disseminate, sell, distribute, publish, broadcast, circulate or commercially exploit the Information or any                  part thereof in any manner without the express written consent of the Company and the relevant Information providers;

 

(2)  use the Information or any part thereof for any unlawful purposes;

 

(3)  use the Information or any part thereof to establish, maintain or provide or to assist in establishing, maintaining or providing a dealing platform or dealing service for trading Securities, Futures/Options Contracts and other investment products;

 

(4)  disseminate the Information to third parties.

 

3.4 The Client agrees to comply with reasonable requests of the Company to protect the Information providers’ and the Company’s respective rights in the Information and the Electronic Services.

 

3.5 The Client shall comply with such reasonable directions as the Company may give from time to time in respect of the permissions to the use of the Information.

 

3.6 The Client acknowledges that the Electronic Services and any software comprised therein are properties of the Company. The Client warrants and undertakes that it will not, and will not attempt to, tamper with, modify, reverse engineer or in any other ways alter such software, and will not attempt to gain unauthorized access to the Electronic Services or any part of the software comprised therein.

 

3.7  The Client agrees that the Company shall be entitled to terminate this Electronic Service Agreement if the Client at any time breaches, or if            the Company at any time reasonably suspects that the Client has breached, this warranty and undertaking.

 

 

4. Limitation of Liability and Indemnification

 

4.1  The Company and the Information providers and their respective directors, officers or employees and their business agents shall not be responsible for any losses, costs, expenses or liabilities suffered by the Client resulting from circumstances beyond their reasonable control, including (without limitation):

 

(1)  delays, failures or inaccuracies arising from communications with the Company through telephone, electronic or other systems that are beyond the Company’s control;

 

(2)  delays, inaccuracies or omissions in or unavailability of research, analysis, market data and other Information provided by the Information providers;

 

(3)  unauthorized access to communications systems, including unauthorized use of the Client’s Login ID, Password and/or Account number; and

 

(4)  war or military actions, government restrictions, labor disputes, closure of or disruption in the ordinary trading of any market or Exchange, severe weather conditions and acts of God.

 

4.2  The Company does not in any way warrant that

 

(1)  any services provided in connection with the Client’s use of the Electronic Services and/or the website will be free of errors, interceptions or interruptions;

 

(2)  the Information, data, or other materials provided or used by or accessible through the Electronic Services and/or the website will be free of viruses or designs that impede operations.

 

4.3  The Client accepts that, while the Company will endeavour to ensure the accuracy and reliability of the Information provided, the     Company does not absolutely guarantee that they are accurate and reliable, and that the Company assumes no liability (whether in tort, contract or otherwise legally) for any losses or damages suffered by the Client as a result of any inaccuracies or omissions or incompleteness or any misleading in the Information.

 

4.4 The Client agrees to indemnify and hold the Company, the Business Agent and the Information providers and their respective directors, officers or employees and their business agents harmless from and against any and all claims, losses, liabilities, costs and expenses (including but not limited to legal fees) arising from the Client’s violation of the “Client Agreement” (including this “Electronic Service Agreement”), applicable securities and futures laws and regulations or any third party’s rights, including but not limited to infringement or violation of any copyright, intellect properties and privacies. The Client’s obligations hereunder shall survive the termination of this “Electronic Service Agreement”.

 

 

5. Termination of Electronic Services

 

5.1  The Company reserves the right to terminate, in its absolute discretion, without notice and without limitation, the Client’s access to the Electronic Services or any part thereof for any reason whatsoever, including but not limited to the unauthorized use of the Client’s Login ID, access number, password and/or Account number, the breach of any provisions of this “Electronic Service Agreement” or the “Client Agreement”, the Company’s inability to obtain any Information continuously from any Information provider or the termination of one or more agreements between the Company and the Information providers.

 

5.2 In the event that the Electronic Services is terminated by the Company, the Information providers and the Company shall have no liability whatsoever to the Client. However, if it is terminated without any causes, the Company shall refund the pro rata portion of any fee that have been paid by the Client for the Electronic Services but has not been used as of the date of such termination.

 

 

6. Risk Disclosure

 

The Client trading via the Electronic Services would be exposed to the risks in relation to the Electronic Services system, including hardware and software failures, the failure to carry out the Client’s orders as he instructs due to any system failures, or the failure to completely carry out the Client’s orders. The Client should read carefully the Risk Disclosure Statements set out in Appendix 2.

 

 

7. General

 

7.1 In the event of any dispute, the Client agrees that the records of the Company (including electronic records) shall prevail.

 

7.2  The Company may amend the terms of this “Electronic Service Agreement” from time to time and will give the Client reasonable notices in writing or through the Electronic Services or through announcements.