T&C nd.ps, page Preflight

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2 STANDARD TERMS AND CONDITIONS FOR FUTURES AND OPTIONS TRADING In consideration for the provision of futures and options trading and related services by KGI FUTURES (HONG KONG) LIMITED ("KGI", which expression shall include the head office and each and every branch of KGI wherever situate, its successors in title and assigns), the client identified in the Account Opening Form and at whose request or on whose behalf one or more accounts are opened with KGI agrees to accept and be bound by the provisions of the Futures Trading Agreement, which said provisions of the Futures Trading Agreement shall apply to all of the said services provided to such client ("Client", which expression shall include its heirs, executors, administrators, personal representatives and successors as the case may be), unless otherwise expressly agreed in writing by KGI. If the Client utilizes or continues to utilize the services of KGI, this shall constitute the Client's acceptance of KGI s terms and conditions which form part of KGI's agreement with the Client and constitute a legally binding contract between the Client and KGI. The Futures Trading Agreement shall be in substitution for and to the exclusion of any prior terms of business between the Client and KGI relating to the subject matter of this Agreement. 1 Interpretation In this Agreement, unless the context otherwise requires, the following terms and expressions shall have the following respective meanings given to them:- Access Codes means the Password, PIN, User ID or such codes as KGI may notify the Client in respect of its access to the Electronic Trading Services; Account means (an) account(s) in the Client s name or designated name opened and maintained with KGI for the purpose of KGI providing trading and related services including holding of funds relating to any purchases, sales, holdings and other dealings in Futures Contracts and Option Contracts as the Client may from time to time instruct KGI to effect; Account Opening Form means the account opening form or other document (however described) prescribed or approved by KGI from time to time and provided by or on behalf of the relevant Client to KGI in respect of an application to open the Account; Affiliate means, in relation to a party, an individual, corporation, partnership or any other form of entity directly or indirectly controlling, controlled by or under common control with such party or any of such entities directors, officers or employees; Authorized Persons means the persons who are specified or designated by the Client to be persons authorized on the Client s behalf to give instructions, whether written, oral or otherwise, in connection with services to be provided by KGI; Business Day means any day on which the relevant Exchange is open for trading during its regular trading sessions, notwithstanding such Exchange closing prior to its scheduled weekday closing time on such day, without regard to any after hours or any other trading outside of the regular trading session hours; Clearing House means, in relation to HKFE, the body appointed by or established and operated by HKFE to provide clearing services to participants of HKFE in respect of HKFE Contracts and, in relation to any other Exchange, any clearing house providing clearing services for any contract traded through or on that Exchange; Clearing Regulations means the general regulations and procedural manuals and practices of the clearing house providing clearing services to participants of HKFE for HKFE Contracts or, in respect of other Exchanges, to members or participants of such other Exchanges for Contracts traded through or on such other Exchanges; Closing out in relation to a Contract held by KGI on behalf of the Client, means entering into a second Futures Contract or Option Contract (as the case may be) on identical terms to the firstmentioned Contract, except: (i) that the price may not be the same as the price specified in the first-mentioned Contract, and (ii) the Client takes the opposite side to the side he holds under the first-mentioned Contract, for the purpose of crystallizing the profit or loss on the firstmentioned Contract, and the expression "close out shall be construed accordingly; Code means the Code of Conduct for Persons Licensed by or Registered with the Commission made under the SFO in force from time to time; "Commission" means the Securities and Futures Commission which was established under the repealed Securities and Futures Commission Ordinance and whose existence continued by virtue of section 3(1) of the SFO or any other body which assumes in whole or in part the powers and functions of the Securities and Futures Commission and has jurisdiction over HKFE under the SFO; Commodity or Commodities means any item and includes, without limitation, agricultural commodities, metals, currencies, shares, interest rates, indices (whether stock market or otherwise), or other financial contracts, energy, right or authority, and shall where the case requires include a Contract in respect of any of the above and in each case whether or not the item is capable of being delivered; Contract means a Futures Contract and/or Option Contract as the context may require; Correspondent Broker means any member or participant of an Exchange and/or Clearing House of which KGI may not be a member or participant who, as KGI s agent, enters into a Contract on such Exchange and/or clears the same, as the case be; Electronic Trading Services means the electronic trading facilities and services which may be provided by KGI including but not limited to services provided or accessible through its Interactive Voice Response System, the Internet and/or any other electronic communication channel; Exchange means HKFE or any other exchange, market or association of dealers in any part of the world on which Contracts are traded; Futures Contract means a contract executed on any Exchange, the effect of which is that: (i) one party agrees to deliver to the other party at an agreed future time an agreed Commodity or quantity of a Commodity at an agreed price; or (ii) the parties agree to make an adjustment between them at an agreed future time according to whether the agreed Commodity is worth more or less or, as the case may be, stands higher or 1

3 lower at that time than a level agreed at the time of making the contract, the difference being determined in accordance with the rules of the Exchange on which the contract is made; Futures Trading Agreement or Agreement means these Standard Terms and Conditions together with the Account Opening Form and the Risk Disclosure Statements and Disclaimers, as the same may be replaced, amended or supplemented by KGI from time to time; HKFE means Hong Kong Futures Exchange Limited and its successors and assigns; HKFE Contract means a Contract approved by the Commission and HKFE for trading on any market established or operated by HKFE pursuant to the HKFE Rules; HKFE Rules means the Rules, Regulations and Procedures of HKFE as revised, amended or substituted from time to time; Margin means such amount in such currency and such other security whatsoever as KGI may from time to time demand in accordance with the Futures Trading Agreement from the Client by way of margin, variation adjustments or cash adjustments in relation to Contracts; Market Requirements means all applicable laws, the Clearing Regulations, the constitution and any rule, regulation, custom, order, direction, restriction, limitation, requirement or condition (including any trading or position limits) of or imposed by any relevant Exchange, Clearing House, broker, Correspondent Broker and/or KGI from time to time; Open Contract means a Contract which has not been closed out; Option Contract means a contract pursuant to which one party grants to the other party a right, exercisable by the latter party either on or (as the case may be) on or before a specified date, to acquire or (as the case may be) to dispose of a specified quantity of a Commodity or Futures Contract at an agreed price; Risk Disclosure Statements and Disclaimers means the risk disclosure statements and disclaimers provided by KGI to the Client before the opening of the Account and/or from time to time; and SFO means the Securities and Futures Ordinance, Chapter 571, Laws of Hong Kong and any subsidiary legislation made thereunder, as amended or substituted from time to time. In this Agreement, words denoting the singular number only include the plural and vice versa and words importing one gender include every gender. 2 Instructions 2.1 The Client may from time to time instruct KGI, acting as the Client s agent, to enter into or close out any Contract for the Account. KGI may decline to accept any instruction from the Client in its absolute discretion and without assigning any reason, whether in relation to the entering into or closing out of any Contract, or the exercise of any rights thereunder. In such event, KGI will endeavour to notify the Client accordingly, but KGI shall not in any circumstances whatsoever be liable in any way for any loss of profit or gain, damage, liability, cost or expense suffered or incurred by the Client arising out of or in connection with KGI declining to act on such instruction or omitting so to notify the Client. 2.2 Instructions may be given orally, in writing or electronically, and shall be irrevocable once given. KGI shall be entitled to rely and act upon any instruction which purports or which KGI believes in good faith to have been given by the Client or by an Authorized Person. Subject to prior written agreement with KGI, the Client may limit the powers and authorities of individual Authorized Persons. Amendments to the list of Authorized Persons shall take effect only when KGI has received and accepted written notification from the Client. 2.3 The Client expressly acknowledges and agrees that KGI neither makes nor implies any representation or warranty as to the value, merit or suitability for the Client of any Contract entered into by KGI on behalf of the Client and the Client shall, independently and without reliance on KGI, make the Client s own judgment and decision with respect to the entering into and closing out of each Contract. 2.4 If KGI or the Correspondent Broker shall not be able to enter into such number of Contracts on behalf of the Client as may have been specified in the Client's instruction, KGI or the Correspondent Broker may enter into any number of Contracts less than the number specified in such instruction as it may be able to do so after having taken reasonable steps, and the Client shall be bound by such Contracts so entered into. Without prejudice to the generality of the foregoing, the Client acknowledges and accepts that the rapid and frequent changes in spot and future prices, general market conditions, and/or the restrictions or limits imposed by any relevant Exchange may make it impossible or impracticable for KGI to carry out the Client s instructions, or to conclude a transaction on behalf of the Client at the prices quoted at any specific time. Neither KGI nor such Correspondent Broker (as the case may be) shall have any obligation or liability whatsoever and howsoever in respect of any failure to enter into Contracts as specified in the Client s instruction. 2.5 The Client s instructions and all Contracts entered into by KGI on behalf of the Client shall be subject to the terms and conditions of the Futures Trading Agreement and to the Market Requirements. In the event of any conflict or inconsistency between Market Requirements and the Futures Trading Agreement, the Market Requirements shall prevail to the extent necessary to resolve such conflict or inconsistency, and KGI may in its absolute discretion take or refuse to take any action, or demand that the Client shall take or refrain from taking any action, to ensure compliance with the same. 2.6 After any Contract has been entered into by KGI on behalf of the Client, KGI shall notify the Client of the details of such Contract in such form, containing such details and provided to the Client within such time limit as KGI may determine, subject to Market Requirements. 2.7 If any relevant Exchange, Clearing House, broker and/or Correspondent Broker on which or through whom any Contract has been entered into by KGI on behalf of the Client requires any alteration in any terms and conditions of any such Contract, KGI may take all such actions on behalf of the Client as KGI may in its absolute discretion consider necessary or desirable to comply therewith or as a result thereof, or to avoid or mitigate loss thereunder, and all such actions shall be binding upon the Client. 3 Electronic Trading 3.1 KGI may provide the Client with Electronic Trading Services and they will be provided upon and subject to the provisions of this Agreement and other terms and conditions to be specified by KGI from time to time. 3.2 When using the Electronic Trading Services, the Client warrants that the Client is the only authorized user of its Access Codes and will be responsible for all instructions placed and all transactions conducted with the use of its Access Codes. The Client undertakes to use its Access Codes with caution. 3.3 The Client will not attempt to tamper with, modify, de-compile, reverse engineer or otherwise alter in any way, or gain unauthorized access to, the Electronic Trading Services. 2

4 3.4 When the Client opens an account on-line, in addition to completing and returning the Futures Trading Agreement through the Internet, the Client agrees to return to KGI the hard copy of the Futures Trading Agreement duly completed and signed by the Client and (unless alternative arrangement acceptable to KGI has been made) witnessed or certified by a professional person such as a branch manager of a bank, certified public accountant, lawyer, notary public or any other person acceptable to KGI. KGI shall be entitled to refuse to execute the Client's instructions until KGI has received such hard copy of the Futures Trading Agreement. 3.5 Unless otherwise agreed by KGI, KGI will not execute the Client s instructions until there is sufficient cleared funds or securities or other property in the Account to settle the Client's transactions. 3.6 KGI will not be deemed to have received the Client s instructions or executed its instructions unless and until the Client is in receipt of KGI s message acknowledging receipt or confirming execution of the Client s instructions. The Client agrees to immediately notify KGI if it does not receive KGI s message acknowledging receipt or confirming execution of its instructions, or the Client is in receipt of any messages in respect of transactions which it did not instruct, or it becomes aware of any unauthorized use of its Access Codes. 3.7 The Electronic Trading Services provide the Client with an additional means to place instructions to KGI. The Client may also do so by calling one of KGI s sales representatives direct. If the Client experiences any problems in reaching KGI through the Electronic Trading Services, the Client may use other methods to communicate with KGI and inform KGI of the difficulty the Client is experiencing. 3.8 The Client agrees to review every instruction before placing it as it may not be possible to cancel its instructions once given. 3.9 The Electronic Trading Services may provide, for informational purposes only, data about securities, derivatives, collective investment schemes, mutual funds and other investment products published by third parties. Owing to market volatility and possible delay in the data-transmission process, the data may not be real-time market quotes for the relevant products. Whilst KGI believes such data to be reliable, it has no independent basis to verify or contradict the accuracy or completeness of the information provided. No recommendation or endorsement from KGI shall be inferred from such data Information provided under the Electronic Trading Services is provided on an as is, as available basis and KGI does not guarantee the timeliness, sequence, accuracy, adequacy or completeness of such information. Neither KGI nor any third party gives any express or implied warranties (including but not limited to warranties of merchantability or fitness for any particular use) with respect to such information Notwithstanding any other provisions contained in this Agreement, where the Client is provided with Electronic Trading Services, following execution of the Client s trading orders, the Client accepts that KGI may send to the Client and the Client agrees to receive contract notes and statements of the Client s transactions through electronic posting to the Account or the Client s address or other electronic means in lieu of printed confirmations. Any such information will be freely accessible by the Client after such sending by KGI and the Client shall print out such electronic contract notes and statements or make its own arrangements forthwith without delay to maintain its own records if necessary. Thereafter, KGI will send to the Client relevant periodic statements summarizing entries in the Account by mail or electronic means or otherwise The Client hereby confirms that due to unpredictable traffic congestion and other reasons, the Electronic Trading Services may not be a reliable medium of communication and that such unreliability is beyond the control of KGI. This may give rise to situations including delays in transmission and receipt of the Client s instructions or other information, delays in execution or execution of the Client's instructions at prices different from those prevailing at the time the Client s instructions were given, misunderstanding and errors in any communication between the Client and KGI and so on. Whilst KGI will take every possible step to safeguard its systems, client information, accounts and assets held for the benefit of KGI s clients, the Client accepts the risk of conducting financial and other transactions via the Electronic Trading Services. 4 Charges and Costs 4.1 In respect of the making of each Contract by KGI as agent on behalf of the Client, and in respect of the closing out or (in the case of an Option Contract) exercise thereof, KGI shall charge the Client a commission calculated at such rate and on such basis as KGI may from time to time determine and notify the Client. In addition, the Client shall pay or reimburse KGI forthwith on demand all commission, brokerage, levies, fees, duties and taxes and all other charges and expenses suffered or incurred by KGI arising out of or in connection with any purchase or sale of Contracts entered into by KGI on behalf of the Client or otherwise arising out of or in connection with the performance of any of KGI s duties under the Futures Trading Agreement. All such amounts may be deducted from the Account and any other accounts maintained by the Client with KGI. 4.2 The Client agrees to pay interest on all overdue balances owing to KGI (after as well as before any judgement), at such rate(s) to be notified by KGI from time to time, which shall accrue daily and be calculated and payable on the last day of each calendar month or upon any demand being made by KGI. In the absence of such notification from KGI, the Client s Hong Kong dollars overdue balances will be charged interest at an annual rate of the higher of (i) eight per cent above the prime lending rate on Hong Kong dollars quoted by the Standard Chartered Bank; or (ii) ten per cent above the prevailing overnight HIBOR. In the case of foreign currency overdue balances, the annual interest rate will be ten per cent over the cost of funds of KGI to be quoted by KGI whether or not it has actually borrowed the funds. 4.3 Without prejudice to any other rights and remedies available to KGI, KGI may charge a monthly maintenance fee of such amount in such currency as KGI may determine from time to time on the dormant Account if the Client has no trading activity for six months or more. Payment of such fees will be automatically deducted from the Account. 5 Margin 5.1 In respect of all Contracts entered into by KGI as agent on behalf of the Client, the Client shall before the relevant Contract is entered into or otherwise immediately upon demand provide KGI with such Margin together with such guarantees and other security in such form and amount and on such terms as KGI may in its absolute discretion require from time to time. Such Margin shall be maintained with KGI and the Client shall not withdraw the same until the Open Contract to which it relates has been closed out. The Margin required by KGI may exceed any margin requirements prescribed by any Exchange, Clearing House, broker or Correspondent Broker and may be changed by KGI with immediate effect without prior notice to the Client. KGI shall be entitled to refuse to execute the Client's instruction unless the Margin required by KGI has been provided to KGI. 5.2 KGI shall be entitled to demand from the Client from time to time such additional Margin as KGI shall think fit in its absolute discretion, 3

5 whether to comply with any requirement imposed by law or by any Exchange, Clearing House, broker or Correspondent Broker or otherwise whatsoever or howsoever, and the Client shall immediately upon demand provide KGI with such additional Margin. 5.3 Margin in the form of assets other than cash will only be accepted by KGI in its absolute discretion. Where shares, stocks and/or other valuables are deposited as Margin, KGI shall have an absolute discretion to assign a notional value (which need not correspond to the market value) to the asset for Margin purpose, which value may change from time to time as determined by KGI in the light of the prevailing market value of the asset or otherwise. 5.4 Without prejudice and in addition to any other rights and remedies of KGI hereunder, the Client hereby irrevocably authorizes KGI, without prior notice to the Client, to apply all or any part of any cash deposit or other property held for the account of the Client by KGI or its Affiliate on any account whatsoever and whether or not relating to trading in Contracts :- (a) in or towards the provision of any Margin or additional Margin demanded by KGI pursuant to Clause 5.1 or 5.2; (b) in payment to any Exchange, Clearing House, broker and/or Correspondent Broker in or towards satisfaction of any liability to provide margin demanded or required by such Exchange, Clearing House, broker or Correspondent Broker in respect of any Contract entered into by KGI on behalf of the Client, or towards provision of security (whether in the form of mortgage, deposit, charge, pledge or otherwise) in favour or to the order of any Exchange, Clearing House, broker and/or Correspondent Broker, without prior notice to the Client and free of any beneficial interest of the Client or of any other person in the margin, as security for KGI s obligations to (and upon terms specified by) the Exchange, Clearing House, broker and/or Correspondent Broker in respect of any Contract entered into by KGI on behalf of the Client, with power to such Exchange, Clearing House, broker and/or Correspondent Broker to enforce the security in satisfaction of any obligations of KGI, provided that the Client s deposit or property shall not be applied to finance or act as security for any Clearing House margin requirements or trading liabilities in respect of Contract entered into by KGI on behalf of any other client (and in either event, such deposit or property will be dealt with according to the rules and regulations of the relevant Exchange, or Clearing House, or the terms of trading of the broker or Correspondent Broker); (c) in satisfaction of any other obligations of KGI to any party insofar as such obligations arise in connection with or incidental to any Contract entered into by KGI on behalf of the Client; and/or (d) in or towards payment of money properly required to meet commissions, brokerage, levies or other proper charges directly relating to any Contract entered into by KGI on behalf of the Client; notwithstanding that any such application may result in the Client being required by KGI to provide additional Margin. 5.5 Margin calls must be met on demand (or such other time limit as may be specified by KGI from time to time however, never later than the time the relevant Exchange requires client margin to be met). Without prejudice to the provisions of Clause 10, failure to meet such calls may result in KGI being entitled or obliged by the rules or regulations of the relevant Exchange and/or Clearing House to close out the Open Contracts held on behalf of the Client in respect of which any Margin calls are not met within the period specified by KGI or at the time of making such call(s), and/or to notify the relevant Exchange, Clearing House, broker or Correspondent Broker particulars of such Open Contracts. In particular, KGI may be required to report to HKFE and the Commission particulars of all open positions in respect of which two successive Margin calls are not met by the Client within the period specified by KGI. 5.6 Unless specifically instructed by the Client, Contracts held in the Account which the Exchange allows to be set off for margin purpose will automatically be set off for the determination of Margin without reference to the Client, but these Contracts will not be closed out or treated as netted off for any other purpose. 5.7 If KGI specifically requires that the Client can only maintain a cash account with KGI for Option Contracts, only long Option Contract positions can be carried in the account. The Client shall pay KGI the full cash value of the premium of the Option Contract on the date of the Client s instruction to KGI to purchase the Option Contract. 6 Settlement 6.1 Subject to Clause 6.5, in respect of each Open Contract for the Client s account which remains subsisting on the maturity date for its settlement, KGI and the Client shall each have an obligation to make or take delivery (as the case may be) of the Commodity the subject matter of the Contract on the maturity date, provided that where, according to the rules of the relevant Exchange, the outstanding obligations of the buyer and seller of an Open Contract shall be satisfied solely by cash settlement based on a difference in price or value, KGI or the Client (as the case may be) shall settle the Open Contract by paying the relevant difference to the other on the maturity date of the Open Contract. The Client shall take all necessary actions to enable KGI to effect due settlement of each Open Contract on behalf of the Client in accordance with the Market Requirements. 6.2 Subject to the terms of the Futures Trading Agreement and to the Market Requirements, the Client may, at any time before the last trading day of a Contract, request KGI to close out the same. Any amount payable by the Client arising out of the closing out of any Contract shall become immediately due and payable to KGI upon the closing out. 6.3 To exercise an option pursuant to an Option Contract entered into by KGI on the Client s behalf, the Client shall deliver to KGI a notice of exercise at least 24 hours before the cut-off date for the tender of exercise instructions prescribed by the writer of the option or the relevant Exchange, Clearing House, broker or Correspondent Broker (whichever prescribes the earliest cut-off date). Unless required by the rules of the relevant Exchange or otherwise agreed between KGI and the Client that the outstanding obligations of the buyer and seller of an Option Contract are satisfied solely by cash settlement based on a difference in price or value, a notice of exercise from the Client shall only be considered to be valid when accompanied:- (a) in the case of a put option, with the underlying Commodity or document of title thereof for making delivery; and (b) in the case of a call option, with sufficient immediately available funds to take delivery of the Commodity. Unless specifically instructed by the Client and subject to the terms of the Futures Trading Agreement, KGI shall not have any responsibility whatsoever to tender any exercise instructions on behalf of the Client in respect of any Option Contract on or before the relevant cut-off date applicable to the Option Contract. 6.4 Where the Client holds a short position under an Option Contract and the option is exercised (or deemed to be exercised on expiry or otherwise), the Client shall on demand pay KGI in cash the settlement amount payable by the Client or make or take delivery (as the case may be) of the Commodity the subject matter of the Option Contract pursuant to the terms of the Option Contract. 6.5 If KGI or the Correspondent Broker (as the case may be) shall for any reason whatsoever and howsoever fail to receive payment of all or any part of any amount or to receive delivery of all or any part of any amount of any Commodity (whether from the relevant Exchange, 4

6 Clearing House, and/or any other person) due to be paid or delivered to the Client in respect of any Contract entered into by KGI on behalf of the Client on the due date for payment or delivery thereof in accordance with the rules and regulations of the relevant Exchange and/or Clearing House and/or any applicable laws, KGI s obligations to make payment or to deliver any Commodity to the Client in respect of such Contract shall thereupon and by virtue of such failure become obligations to make payment of such amount or delivery of such quantity of such Commodity as is equal to such payment or such quantity as is actually received by KGI in respect thereof. 6.6 KGI may in its absolute discretion but shall not be bound to act on any instruction from the Client to take any action whatsoever or howsoever against any Exchange, Clearing House and/or any other person in respect of any failure by such Exchange, Clearing House and/or other person to make any payment or to deliver any amount of any Commodity in respect of any Contract entered into by KGI on behalf of the Client as provided in Clause 6.5, provided that if any such action is taken by KGI, the Client shall fully indemnify KGI on demand in respect of all costs, claims, demands, damages and expenses arising out of or in connection with the taking of such action. 6.7 Any statement or confirmation signed by any authorized signatory of KGI stating the price or value at which any Futures Contract or Option Contract is entered into or closed out, or the exchange rate applicable in any currency conversion, or the amount owing by the Client to KGI at any given time, shall (in the absence of manifest error) be binding on the Client as to the particulars stated. 7 Payment 7.1 The Client shall pay KGI forthwith upon demand by KGI at any time the full amount of all losses, debit balances and deficiencies resulting from any transaction between the Client and KGI, or from the operation of the Client s Account. Payment shall be made in such currencies as KGI may from time to time prescribe. 7.2 Without prejudice to the Client s obligation to effect payment on demand, each payment (whether by way of direct payment, transfer, debit or credit) to be made by the Client to KGI in relation to the Futures Trading Agreement shall be made not later than the close of business (Hong Kong time) on the date on which payment is required to be made. 7.3 The Client will be responsible to KGI for any losses, costs, fees and expenses in connection with the Client s failure to meet the Client s obligations by the due settlement date as described above. 7.4 All payments by the Client for transactions or otherwise in connection with the Futures Trading Agreement shall be made in cleared funds in the currency and at the place specified by KGI, (i) free of any restrictions, conditions or equities, (ii) free and clear and without any deduction or withholding on account of any taxes, and (iii) without deduction or withholding on account of any other amount, whether by way of set-off, counterclaim or otherwise. 8 Dealings 8.1 KGI or its Affiliates, may have an interest, relationship or arrangement that is material in relation to any instruction received or transaction effected for the Client. In particular, KGI and its Affiliates may, without reference to the Client:- (a) effect transactions for the Client with or through an Affiliate or any Correspondent Broker; (b) effect transactions with the Client as principal for KGI s or its Affiliate s own account; (c) effect transactions where KGI or its Affiliates have a position in the Contract; and/or (d) match the Client s orders with those of other clients; and neither KGI nor any of its Affiliates shall be obliged to account to the Client or any third party for any profits or benefits received in connection therewith. 8.2 Nothing herein shall place KGI under any duty to disclose to the Client any information which may come to the notice of KGI in the course of acting in any capacity for any other person, nor shall KGI be under any obligation to the Client to see that any information pertaining to any Contract acquired by KGI be given either before or at the same time as such information is made available to other clients. However, KGI shall take all reasonable steps to avoid conflicts of interest and where such conflicts cannot reasonably be avoided, take all reasonable steps to ensure that clients are at all times treated fairly. 8.3 The Client acknowledges that due to the trading practices of the exchanges or other markets in which transactions are executed, it may not always be able to execute orders at the prices quoted at a particular time or at best or at market and the Client agrees in any event to be bound by transactions executed following instructions given by the Client or its agent. The Client agrees that KGI shall not be under any liability for any loss incurred as a result of transactions which take place in the circumstances contemplated in this clause. 8.4 KGI may convert funds into and from foreign currencies at such reasonable rates of exchange as KGI may determine in KGI s sole discretion. The Client acknowledges that any profit or loss arising from a fluctuation in the exchange rate of the relevant currency will be for the Client s account. 8.5 Unless indicated by KGI in the relevant contract note or otherwise, KGI is acts as the Client's agent in respect of transactions executed pursuant to the Futures Trading Agreement. 8.6 Except as may be expressly agreed by KGI otherwise, the Client understands and accepts that no interest will accrue to the Client on any amounts held in the Account or for the Client and KGI has the right to retain for its own benefit any and all amounts derived by way of interest on the Client's money. 9 Priority 9.1 The Client understands that, subject to Market Requirements, KGI will handle its clients orders fairly, due regard being had to the sequence in which such orders were received, provided always that orders of clients should have priority over orders for the account of KGI or any account in which KGI has an interest or the account of any employee or agent of KGI. 9.2 KGI may, without prior reference to the Client, combine for execution the Client s orders with the orders of other clients, with KGI s own orders or the orders of KGI s Affiliates. This may result in a more favourable or less favourable price being obtained for the Client than would have been achieved had the orders been executed separately. Where there are insufficient Contracts to satisfy orders so combined, the transactions shall be allocated between clients in such manner considered to be fair by KGI, with due regard being given to the sequence in which such orders were received, provided always that priority shall be given to satisfy the orders of clients over those of KGI or its Affiliates. 10 Unilateral Closing Out 10.1 KGI shall be entitled to exercise its powers under Clause 10.2 upon or at any time after the occurrence of any of the following events:- (a) the Client fails to pay on demand or when due any sum (in particular, any Margin) due to KGI or any Affiliate of KGI, or fails to perform any of the Client s other obligations under the Futures Trading Agreement; 5

7 (b) the Client fails to make payment in respect of any loan, guarantee, indemnity or other indebtedness or obligation for borrowed money on the due date for payment, or any such loan, guarantee, indemnity or other indebtedness or obligation for borrowed money becomes, or is declared, or becomes capable of being declared, due prematurely for any reason; (c) any information supplied by the Client to KGI, whether in the Account Opening Form or otherwise, or any warranty made by the Client in the Futures Trading Agreement, is incorrect or misleading in any material respect; (d) any attachment or sequestration is levied against any account of the Client with KGI or any Affiliate of KGI, or any injunction, prohibition order or similar order is declared on any of the Client s assets, or execution, distress or similar process is levied against any of the Client's assets; (e) a judicial declaration of incompetence is made in respect of the Client, or the Client dies; (f) it shall become unlawful for the Client to maintain the Account or to perform any of the Client s obligations under the Futures Trading Agreement, or any authorization, consent, approval or licence necessary for the Client to continue the Account or to perform any of its obligations under the Futures Trading Agreement shall be revoked or otherwise cease to be in full effect; (g) there occurs a material adverse change in the business, assets or general condition of the Client which, in the absolute opinion of KGI, may adversely affect the due performance by the Client of its obligations under the Futures Trading Agreement; or (h) where KGI determines in its absolute opinion that the exercise by KGI of any powers conferred by Clause 10.2 is necessary for compliance with any rules, regulations or requirements of any Exchange, Clearing House, broker and/or Correspondent Broker; in particular, if the HKFE prohibits or restricts KGI from carrying short position on behalf of Clients Upon or at any time after the occurrence of any of the events specified in Clause 10.1, KGI shall forthwith be entitled, without any demand or demand for additional Margin, without notice to the Client and notwithstanding any prior Margin call which has been made, to do any of the following things in its absolute discretion:- (a) close out, perform or maintain any Open Contract in the Account and, for this purpose, make or take delivery of the underlying Commodity in respect of any such Contract, sell any Contract, initiate new long or short positions to establish a spread or straddle, or do a combination of any of the foregoing; (b) cancel any outstanding order or other commitments made on behalf of the Client; (c) borrow or purchase any Commodity required to make delivery on behalf of the Client; and/or (d) exercise any options (put or call) arising from any Option Contract held by KGI on behalf of the Client KGI shall have absolute discretion to choose which (if not all) Open Contracts to close out or (in respect of Option Contracts) to tender exercise instructions, and may sell any security on a single or collective basis. The Client hereby waives all claims and demands (if any) against KGI in respect of any loss, involuntary or otherwise, directly or indirectly arising from the exercise by KGI of the powers conferred by the Futures Trading Agreement, howsoever such loss may have been caused (other than through the wilful misfeasance or gross negligence of KGI, or the reckless disregard of the obligations of KGI under the Futures Trading Agreement), whether in relation to the timing or manner of the exercise of powers or otherwise. The Client specifically acknowledges and accepts that:- (a) nothing in Clause 10.2 shall impose any obligation on KGI to close out any Open Contract or exercise any option on behalf of the Client; and (b) in view of the frequent and rapid changes in spot and future prices, KGI is not under any obligation to assess price movement or market trend in exercising its powers under Clause 10.2 (in particular, in determining the timing for the exercise of such powers), nor to limit or mitigate any loss which the Client may incur as a result of the market position moving against the Client s favour, and the market condition may render it impossible or impracticable to close out any of the Client s open positions within any given time Without prejudice to the generality of the foregoing, upon the occurrence of any of the following in relation to the Client: (a) an order is made by a competent court or a petition is presented or a resolution passed for the winding-up, bankruptcy, official management or dissolution (other than pursuant to a consolidation, amalgamation or merger) of the Client or any other relief under any bankruptcy or insolvency law or other similar law affecting creditors rights; or (b) a receiver, administrator, provisional liquidator, conservator, trustee, or similar official is appointed for the Client or over the whole or a substantial part of the Client s assets, each Open Contract in the Account shall be immediately terminated and of no further effect and the only obligations thereafter in respect of such Open Contract shall (subject as provided in Clause 13) be the obligation on the part of either KGI or the Client to pay such sum as shall be determined by:- (aa) calculating the amount of profit or loss that would arise in respect of such Open Contract, as if it had been closed out immediately upon the occurrence of the relevant event at the then prevailing market rate; (bb) converting any such amount arising in a currency other than Hong Kong dollar to Hong Kong dollar by reference to the then prevailing spot market rate; (cc) discounting to present value at the prevailing interest rates for the deposit of a comparable amount quoted by the Standard Chartered Bank each such amount to take account of the period between the date of such close out and the applicable settlement date; and (dd) setting off the aggregate of all the amounts so arising in favour of KGI against the aggregate of all amounts arising in favour of the Client. If the net sum so produced is in favour of KGI, the sum shall be payable forthwith by the Client. If the net sum is in favour of the Client, the sum shall be payable forthwith by KGI. 11 Set-off and Charge 11.1 KGI shall be entitled and authorized to, for itself or as agent for its Affiliates, at any time or from time to time and without notice to the Client, notwithstanding any settlement of account or other matter whatsoever, combine or consolidate all or any of the accounts of the Client and/or its Affiliates (including the Account) with KGI and its Affiliates (of whatever nature and whether held individually or jointly with others) and set-off or transfer any money, securities or other property standing to the credit of any one or more of such accounts in or towards satisfaction of any of the Client s or any of its Affiliates indebtedness, obligations or liabilities to KGI and/or any of its Affiliates, on any other accounts (including the Account) whether such indebtedness, obligations or liabilities be present or future, actual or contingent, primary or collateral, several or joint and secured or unsecured. Where such set-off, consolidation, combination or transfer requires the conversion of one currency into another, such conversion shall be calculated at the rate of exchange conclusively determined by KGI to be applicable. 6

8 11.2 The Client as beneficial owner hereby charges in favour of KGI and each of its Affiliates (including but not limited to KGI Asia Limited) by way of first fixed charge all securities, Commodities or other property, including Margin, from time to time deposited by or on behalf of the Client with KGI or purchased for or otherwise being held in or by or under the order or control of KGI for the Account or any other account whatsoever, including any and all rights, title and interest, present and future, therein (collectively, Charged Property ) as continuing security for all of the Client's liabilities and obligations due, owing or incurred towards KGI and each of its Affiliates (including but not limited to KGI Asia Limited) of whatever nature and from time to time and the Client hereby assigns and releases to KGI and each of its Affiliates all such securities, Commodities or other property as aforesaid. In the event of the Client failing to pay any indebtedness or outstanding amount due, owing or incurred to KGI or any of its Affiliates (including but not limited to KGI Asia Limited) when due or on demand by the relevant company, or an order is made or petition presented or resolution passed for the bankruptcy, winding up or dissolution of the Client, or the Client is declared incompetent or dies, KGI shall be entitled to sell or, as the case may be, the relevant Affiliate shall be entitled to direct KGI to sell, at the absolute discretion of the relevant company both as to manner and time of sale and consideration, any of the Charged Property whether or not held in mutuum and whether or not the delivery of any property comprised in the Charged Property shall have been required pursuant to any instruction from the Client or any Authorized Person and to deduct from the sale proceeds such amount as is necessary to discharge the indebtedness or outstanding amount and pay the same to the relevant company. For this purpose, a certificate issued by KGI or any of its Affiliates certifying the amount of indebtedness or outstanding amount due to it by the Client at any time and that the Client has failed to pay the same to it shall be final, conclusive and binding on the Client The provisions of this Clause 11 shall be without prejudice to any rights to which KGI may be entitled to by law. 12 Representations, Warranties and Undertakings 12.1 The Client warrants that it has full and unrestricted power to enter into the Futures Trading Agreement and that it has obtained all necessary consents and has taken all necessary actions (including, where appropriate, any action required under its corporate or other organizational documents) to authorize it to enter into the Futures Trading Agreement and to perform its obligations hereunder In relation to all transactions entered into pursuant to the Futures Trading Agreement, the Client warrants and undertakes that it will obtain, and maintain in effect, all necessary consents of any governmental or other regulatory body or authority applicable to each such transaction and that it will comply with the terms of the same and all applicable laws, regulations and directives. The Client shall, forthwith on demand by KGI, deliver to KGI copies of all such consents or such other evidence of any such consents and such evidence of compliance (including certifications of the Client) with the terms of such consent and with any such laws, regulations and directives as KGI may from time to time require The Client agrees not to charge or pledge, or allow to subsist any charge or pledge over, the Margin or any property or rights forming part of the Account without KGI s agreement or to sell, grant an option over, or otherwise deal in any way with or propose to sell, grant an option over or deal with the same The Client confirms that the Account Opening Form in relation to the opening of the Account has been duly completed and that the information therein is true, complete and accurate. KGI is entitled to rely fully on such information and representations for all purposes. KGI is authorized at any time to contact anyone, including the Client s banks, brokers or any credit agency, for the purpose of verifying the information provided in the Account Opening Form The Client represents and warrants that it is the person or entity (legal or otherwise) ultimately responsible for originating the instruction in relation to each transaction in the Account and the person or entity (legal or otherwise) that stands to gain the commercial or economic benefit of each transaction in the Account and/or bear its commercial or economic risk. The Client will also ensure that only the Client or an Authorized Person will place an instruction with KGI in relation to the Account. If, in relation to any particular transaction in the Account, the Client is not such a person or entity, the Client undertakes and agrees to provide information on the identity, address and contact details of such person or entity to KGI before giving the instruction to KGI and KGI may refuse to accept such instruction. The Client also undertakes and agrees to provide such information directly to the relevant exchanges, government agencies or regulators within two days of KGI's written request and such undertaking and agreement will survive any termination of the Futures Trading Agreement Where the Client is acting as an investment manager of any collective investment schemes, discretionary accounts or trusts, if there are any transactions in which the Client s investment discretion is overriden, the Client agrees that it will advise KGI of such fact and provide information on the identity and contact details of the person overriding its investment discretion before giving the instruction to KGI. The Client also undertakes and agrees that it will disclose such information to the relevant exchanges, government agencies or regulators direct within two days of KGI s written request and such undertaking and agreement will survive any termination of the Futures Trading Agreement The above representations and warranties shall be deemed to be repeated immediately before each transaction or dealing is carried out for or on behalf of the Client. 13 Indemnity and Liability 13.1 The Client agrees that KGI, its directors, officers, employees and agents are not liable for any losses, including loss of profits, costs or expenses suffered or incurred by the Client as a direct or indirect result of or in connection with any Contract entered into by KGI as agent on behalf of the Client or the provision of services by KGI, or any failure or delay to provide the same, unless, and then only to the extent that, such losses, costs or expenses are caused by the gross negligence, wilful default or fraud on the part of KGI, its directors, officers, employees or agents in the provision of such services Without prejudice to any other rights KGI may have under the Futures Trading Agreement or otherwise, the Client agrees to indemnify fully and keep fully indemnified each of KGI, its directors, officers, employees, Affiliates and agents against any cost, expense, damage, loss or liability whatsoever which may be suffered or incurred, whether directly or indirectly, in connection with the provision of services under the Futures Trading Agreement or arising out of any breach by the Client of any term of the Futures Trading Agreement including any representation, warranty or undertaking given by the Client. 14 Amendment and Transfer 14.1 KGI may from time to time in its absolute discretion amend the terms and conditions of the Futures Trading Agreement by giving the Client prior notice of the changes which will become effective from the date specified in such notice. 7