CUSTOMERS MAY LOSE MORE THAN THE AMOUNT OF FUNDS IN THEIR CFDS, MARGIN FX AND COMMODITIES ACCOUNT.

Transcription

1 IMPORTANT NOTICES / DISCLAIMERS This is a (PDS) prepared by GTL Tradeup Pty Ltd (GTL Tradeup). The date of this PDS is 9 th. This PDS relates to the issuance of Over-the-Counter (OTC) derivatives such as Contracts for Difference (CFDs), Margin FX and Commodities WARNING OTC derivatives such as CFDs, Margin FX and Commodities are speculative products that are highly leveraged and carry significantly greater risk than non-geared investments. Because of the leverage provided by CFDs, Margin FX and Commodities, you may lose more than your initial amount invested. You should not invest in CFDs, Margin FX and Commodities unless you are experienced in equity derivatives and understand and are comfortable with the risks of investing in CFDs, Margin FX and Commodities. You should obtain your own financial, legal, taxation and other professional advice as to whether CFDs, Margin FX and Commodities are an appropriate investment for you. By trading in CFDs, Margin FX and Commodities, you are also exposed to credit risk in respect of GTL Tradeup. See section 4 for more information. This PDS is important and should be read in its entirety. Investors should ensure they read and understand this PDS, in particular section 4 Significant Risks and determine whether this product is suitable for them, before deciding whether to open a CFDs, Margin FX and Commodities account with GTL Tradeup and invest in CFDs, Margin FX and Commodities. This PDS also contains other important information about the costs of CFDs, Margin FX and Commodities and the significant characteristics, features and benefits of CFDs, Margin FX and Commodities. Issuer The CFDs, Margin FX and Commodities, offered under this PDS are issued by GTL Tradeup Pty Ltd ABN Australian Financial Services License no Contact GTL Tradeup s registered office is located at: Level 8, 92 Pitt Street, Sydney NSW 2000 Telephone: (02) sales@gtltradeup.com Internet: Representations GTL Tradeup does not guarantee the performance, return of capital from, or any particular rate of return of any CFDs, Margin FX and Commodity contract. Investment products are always subject to investment risk. CUSTOMERS MAY LOSE MORE THAN THE AMOUNT OF FUNDS IN THEIR CFDS, MARGIN FX AND COMMODITIES ACCOUNT. Investments in CFDs, Margin FX and Commodities involve significant investment risk, including possible delays in payment and loss of income or capital invested. Customers should note that historical financial performance of any CFD, Margin FX and Commodity or any underlying asset is no assurance of future financial performance. The information contained in this PDS is general advice only. In preparing this PDS, GTL Tradeup has not taken into account your objectives, financial situation or particular needs. You should consider the appropriateness of opening a CFDs, Margin FX and Commodities account and entering into CFDs, Margin FX and Commodities having regard to your objectives, financial situation and needs and should obtain your own financial, legal, taxation or other professional advice. No aspect of this product has been endorsed or approved by any underlying exchange or the Australian

2 Securities & Investments Commission or any party or market referred to in this PDS. Use of examples in this PDS are provided for illustrative purposes only and do not necessarily reflect GTL Tradeup s actions or determinations or your personal circumstances. Update of information Information in this PDS may be updated from time to time where that information is not materially adverse to customers. GTL Tradeup may provide updated information on the GTL Tradeup website: A copy of the updated information is also available upon request free of charge by contacting GTL Tradeup. GTL Tradeup may be required to issue a supplementary PDS as a result of certain changes, in particular where the changes are materially adverse from the point of view of a reasonable person deciding as a retail client whether to open a CFDs, Margin FX and Commodities account or invest in GTL Tradeup CFDs, Margin FX and Commodities, Margin FX and Commodities, Margin FX and Commodities. This PDS and any supplementary PDS is available in paper form and in electronic form from our website at or you can call Table of Contents 1. Introduction 3 2. Description of CFDs, Margin FX and Commodities, issued By GTL Tradeup 8 3. Significant Benefits Significant Risks Amounts Payable And Interest/Rollover Payments Taxation Other Important Information CFDs, Margin FX and Commodities examples Glossary 29 Defined Terms Defined terms used in this PDS are defined in the Glossary in section 9 or elsewhere in this PDS, unless the context otherwise requires. Key Features Feature Description Cross- Reference Issuer of this PDS and CFDs, Margin GTL Tradeup Pty Ltd (AFSL ) (GTL Tradeup) Section 2.1 FX and Commodities Reference Asset The CFDs, Margin FX and Commodities, offered under this PDS relate to underlying Section 2.2 securities which are quoted on ASX Long and short positions You may enter into long and short positions depending on your view of the market Section 2.4 Adjustments / Corporate Actions If an adjustment is made to an underlying asset to which a CFD relates, GTL Tradeup has Section 2.8 a broad discretion to vary the terms of your orders and CFDs, Margin FX and Commodities, Margin FX and Commodities. Dividends If you have a long position you will generally receive from GTL Tradeup a cash amount Section 2.9 equal to the amount of any dividend or distribution paid in respect of the underlying asset (without franking credits). If you have a short position you will generally be required to pay to GTL Tradeup an amount equal to the amount of any dividend or distribution paid in respect of the underlying asset, plus (in some circumstances) any applicable franking credit. CFD, Margin FX and Commodities Complete and sign the CFD, Margin FX and Commodities customer agreement Form and Section 2.3 customer agreement return it to GTL Tradeup or your adviser Minimum CFD, Margin FX and Commodities account opening You must deposit the Minimum Deposit Amount as notified to you by GTL Tradeup into your CFD, Margin FX and Commodities account. Section2.3 2

3 balance Opening CFD, Margin FX and Orders can be placed through our Internet Trading Platform, by phone, fax or by Commodities or in any other manner acceptable to GTL Tradeup. Closing CFD, Margin FX and You may close a CFD at any time during the trading hours of the Relevant Exchange by Commodities instructing GTL Tradeup to close your open CFD position Initial Margin Initial Margin rates are generally set at between 10% - 35% of the Contract Value of the CFD but may vary (up to 100% of the Contract Value) depending on volatility. Variation Margin All CFDs, Margin FX and Commodities are marked to market daily following the close of business on each Business Day during the term of a CFD, with profits or losses credited or debited to your CFD, Margin FX and Commodities account. Additional Margin GTL Tradeup may require payment of Additional Margin if the Gross Liquidation Value of your account falls below AUD1,000 or if the amount in your account is not sufficient to meet all payments when due. Commission Commission is charged on each CFD transaction when you enter into the CFD and when you close your CFD position. This commission will not exceed 35 basis points (i.e. 0.35%) of the Contract Value when the CFD position is opened or closed, subject to a minimum ticket as described in section 5.1. Internet Trading platform If you use one of GTL Tradeup s Internet Trading platforms, you may be charged a monthly fee. Credit interest GTL Tradeup will pay interest to you on your CFD, Margin FX and Commodities account credit balances at the GTL TRADEUP Base Rate minus a maximum of 3.5% per annum. Debit interest You will be required to pay interest to GTL Tradeup on CFD, Margin FX and Commodities account debit balances at the GTL Tradeup Base Rate plus a maximum of 4% per annum. Short funding rate The funding rate GTL Tradeup will pay you if you hold a short CFD position overnight is the GTL Tradeup Base Rate less a maximum of 3% per annum. Long funding rate The funding rate you must pay GTL Tradeup if you hold an open long CFD position overnight is the GTL Tradeup Base Rate plus a maximum of 3% per annum. Default interest You will be required to pay interest to GTL Tradeup on any overdue unpaid amounts at the Base Rate plus a maximum of 8% per annum Section 2.4 Section 2.6 Section Section Section Section 5.1 Section 5.2 Section Section Section Section Section Introduction 1.1 What is a contract for difference? A contract for difference (CFD) is an agreement which allows you to make a profit or loss from fluctuations in the price of an underlying quoted security without actually owning or exchanging that security. Under the CFD, one party is entitled to be paid an amount of money, or is required to pay an amount of money, depending on movements in the price or value of the underlying asset. This transaction, also commonly referred to as a swap transaction, concludes with the parties settling the difference between the value of the underlying asset at the time the CFD was entered into and the value of the underlying asset at the time the CFD is closed. During the term of the CFD transaction, the price of the underlying asset will be marked-to-market daily so that at the end of each Business Day during the term of the CFD transaction, a payment will generally have to be made by you to GTL Tradeup, or to you by GTL Tradeup, to reflect any changes in the value of the underlying asset during such Business Day. More information can be found in section below under the heading Variation Margin. CFD trading allows you to take leveraged long or short positions without having to take or make delivery of the underlying asset. Instead, you provide a cash deposit, the amount of which fluctuates daily depending on the Contract Value of the CFD (known as the Initial Margin ) as collateral. Although a CFD generally replicates the price movement of the underlying asset, you have no right or obligation to acquire or deliver the security itself and no other rights of shareholders of the underlying securities, such as voting rights. You are not entitled to receive any dividends or other distributions which may be paid in respect of the underlying asset. However, certain cash adjustments may be made to your CFD, Margin FX and Commodities account on or as a result of a dividend or other distribution in respect of the underlying asset (see further sections 2.8 and 2.9). GTL Tradeup deals in CFDs, Margin FX and Commodities in respect of underlying securities traded on a number of 3

4 exchanges including ASX, NYSE (New York Stock Exchange), LSE (London Stock Exchange), TSE (Tokyo Stock Exchange), among others. However, this PDS only relates to CFDs, Margin FX and Commodities in respect of underlying securities which are quoted on ASX. 1.2 Who trades in CFDs, Margin FX and Commodities and why? People trade in CFDs, Margin FX and Commodities for a variety of reasons. Some trade to speculate with a view to profiting from fluctuations in the price or value of the underlying asset. For example, share CFD traders may be shortterm investors who are looking to profit from intra-day and overnight movements in the underlying shares. CFD traders may not wish to sell or purchase the underlying shares themselves, but may instead be looking to profit* from market movements in the shares concerned. Others trade CFDs, Margin FX and Commodities to hedge their exposures to the underlying asset. For example, CFDs, Margin FX and Commodities can be used as a risk management tool to enable those with existing holdings of underlying shares to lock in an effective sale price for the shares concerned by taking a short CFD position. If the price of the underlying shares the investor holds falls, the short CFD positions will wholly or partly offset the losses incurred on the physical holdings. CFDs, Margin FX and Commodities also allow people to trade on a leveraged basis. You are able to outlay a relatively small amount (in the form of Initial Margin) to secure an exposure to the underlying asset. *Note: The risk of loss in trading in derivatives and/or leveraged products can be substantial. A client should carefully consider whether trading such products is appropriate for them in light of their objectives, financial situation and needs. 1.3 Regulatory Guide 227 ASIC has developed seven disclosure benchmarks for Over-the-Counter derivatives, such as CFDs & Margin FX, that can help retail investors understand the risks associated with trading these products. The benchmarks aim is to help retail investors assess the potential benefits and risks associated with deciding whether an investment in CFDs & Margin FX is appropriate for them. Benchmark 1: Client Qualification Before opening a live CFD / FX account GTL Tradeup are required to ensure prospective clients understand the complex nature of derivative trading and the trading platforms used to trade them. Clients should read the PDS carefully and ensure that you fully understand the risks involved. Trading in CFDs, Margin Fx and Commodites that GTL Tradeup offers may not be suitable for all investors due to the significant risks involved. GTL Tradeup can only accept new clients who meet a certain level of experience and knowledge in trading Over-the-Counter (OTC) derivatives such as CFD, FX and Commodities. This will be done by GTL Tradeup asking you questions via an online quiz in order to assess your understanding and experience with OTC derivatives. If it should be necessary, GTL Tradeup will recommend that you obtain further experience and education before opening an account. Applicants who initially fail the assessment may re-apply for an account and redo the assessment. Benchmark 2: Funding Accounts GTL Tradeup clients are able to fund their trading accounts in a number of ways. Clients may deposit funds, as opening and ongoing collateral, through, electronic funds transfer (EFT), cheque, international bank transfer and BPAY. Australian Domestic Bank Transfer EFT is a transfer method which allows telephone or internet banking to registered banks and institutions. EFTs are fast and highly secure method of transferring funds. Clients should allow up to 2 full working days for funds to be received by GTL Tradeup. 4

5 Alternatively you can physically go into your bank or financial institution and make payment over the counter using the details provided. Clients should allow up to 2 full working days for funds to be received. International Bank Transfer (S.W.I.F.T) A wire transfer is an electronic transfer of money between financial institutions. These transfers are fast and highly secure. Clients should allow up to 2 full working days for funds to be received. Please contact GTL Tradeup to find out more information on deposit methods. Withdrawals When opening a trading account with GTL Tradeup clients are asked to supply details of their nominated bank account in the same name as their proposed trading account. Withdrawals will be made using a client s nominated bank account. Withdrawals maybe requested by and will be processed as quickly as possible during normal banking hours. Clients should be aware that funds can take several working days to be returned to you after GTL Tradeup receives your withdrawal request. Benchmark 3: Counterparty Risk (Hedging) The policy described below has been developed considering the ASIC RG227 benchmarks and is contained in our Compliance Plan. This document outlines the procedures GTL Tradeup use to manage market risk and GTL Tradeup s exposure limits for hedging counterparties. This policy can be GTL Tradeup executes a back to back transaction for each client transaction with our parent entity GTL Trading DMCC located in Dubai, United Arab Emirates. GTL Trading DMCC utilises the hedging services of two primary counter parties ABN Amro and Rabobank. Further information about GTL Trading DMCC is available on request from GTL Tradeup. GTL Tradeup s credit risk is the risk that a counter party fails to implement its obligations to GTL Tradeup which results in financial loss to GTL Tradeup. GTL Tradeup s management of credit risk protects GTL Tradeup and its clients from any unexpected changes in the solvency of our counterparts. GTL Tradeup s policy for risk allows us to facilitate instant execution on behalf of our clients, and as a result our risk limits, under normal market conditions, are considered conservative. GTL Tradeup s business is based on order flow, spread/commission and leverage financing margin. GTL Tradeup does not take the other side of a client s position with the intent to benefit from a client loss. GTL Tradeup does not take proprietary positions based on an expectation of market movements. GTL Tradeup initiates a formal market risk policy which includes using a proprietary automated algorithm for setting limits, for all client trades. The proprietary algorithm counters the underlying net exposure arising from client activity and hedges that exposure consistent with GTL Tradeup s risk policy. GTL Tradeup s proprietary risk management algorithm allows GTL Tradeup to continuously monitor its exposure in real time. If GTL Tradeup s exposure exceeds our risk management limits as a result of clients closing existing or opening new positions, our policy requires that sufficient hedging is created or reduced to bring the net exposure back within our defined limits. Alterations to GTL Tradeup s market risk policy will be notified to its clients where relevant. 5

6 When GTL Tradeup enters into CFDs, Margin FX and Commodities with its clients, GTL Tradeup may, in turn, hedge its exposure to those clients with a third party selected by GTL Tradeup the hedge counterparty. GTL Tradeup may use funds from the segregated account to meet its obligations to a hedging counterparty. GTL Trading DMCC and GTL Tradeup only conduct hedging with counterparties that are considered by Standard & Poors (S&P) to be of an A+ or higher credit rating. GTL Trading DMCC s two key hedging counterparties are ABN AMRO (S&P A+) and Rabobank (S&P AA). If GTL Tradeup defaults on its obligations, investors may become unsecured creditors in an administration or liquidation and will not have recourse to any underlying assets in the event of the GTL Tradeup s insolvency. Benchmark 4 Counterparty Risk (Financial Resources) GTL Tradeup maintains and applies a written policy to ensure the ongoing maintenance of adequate financial resources. We further maintain a detailed Risk Register, in which key risks of our business are identified, reviewed and controls implemented. Steps taken on a daily basis to ensure GLT Tradeup s financial requirements are maintained include, but are not limited to, monthly monitoring of adjusted surplus liquid funds calculation, conducting a daily client cash segregation calculation and transferring money owed to clients to segregated client accounts if needed. The credit risk which you have on GTL Tradeup depends on its solvency generally as well as on the amount (and kind) of its capitalisation, its cash flow, all of its business risks, its client and financial product concentration risks, its counterparty risks for all of its business and transactions, its risk management systems and actual implementation of that risk management. Your credit risk will fluctuate throughout the day and from day to day, including due to the implied credit risk on hedging counterparties, whose credit risk to GTL Tradeup (and so indirectly to you) cannot be assessed or verified on a continuous basis or perhaps at all. We have a designated Compliance Officer whose role is to monitor our compliance in relation to our license conditions, Corporations Act and ASIC RG 166 obligations who reports to our Responsible Manager. We receive input and reviews from our external accountants and legal providers, our accounts are independently audited at the end of the financial year. To allow you to assess the credit risk of the product please request in writing a free copy of our audited accounts from the address listed below: GTL Tradeup Pty Ltd GPO Box 1904 Sydney NSW 2001 GTL Tradeup conducts stress tests for adverse movements in market conditions of between 5% and 10% of total client equity. Benchmark 5 Client Monies Policy 6

7 GTL Tradeup maintains and applies a clear policy in relation to the use of client money. Please be aware that any money deposited into your trading account is deposited with other client moneys in our segregated client account and co-mingled with other client deposits. This money is applied to client or settlement obligations to pay for agreed fees, margins and other costs as required. You should be aware that, for client accounts GTL Tradeup is permitted by law to use client moneys in the account to meet obligations incurred by GTL Tradeup in connection with margining, guaranteeing, securing, transferring, adjusting or settling dealings in derivatives (not just these Margin FX and CFDs) by GTL Tradeup, including dealings on behalf of people other than the client whose moneys were deposited into the account. Monies deposited into your trading account to meet margins, deposits, fees, transactions settlement, or other costs may be forwarded (if applicable) to our licensed third party clearing and execution providers, and applied against your margin, exchange, fee and settlement obligations. Client monies held for future transactions will be kept in the segregated client account as required by the Corporations Act. Although funds are kept in a segregated account you may not be afforded absolute protection. GTL Tradeup enters into arrangements with third party execution and clearing providers to facilitate transactions and settlements and uses monies received for Margin Calls and settlements for this purposes. Clients need to be aware that they are indirectly exposed to the financial risks of these counterparties and other organizations GTL Tradeup hold client monies with. If GTL Tradeup or our counterparties financial condition deteriorates then this places at risk the ability to return client monies and you may suffer unrecoverable losses. As client funds are co-mingled with funds from other clients in the segregated client account there is a likelihood that your funds may be used to cover payment obligations of other clients and you may suffer losses due to defaults by other clients. In the event of our insolvency your entitlements as a creditor will rank equally with all other clients Benchmark 6: Suspend Underlying Assets An underlying asset may be suspended, delisted or subject to a trading halt on the Relevant Exchange in various circumstances. In these circumstances, GTL Tradeup may, in its absolute discretion, cancel your order in respect of a CFD, Margin FX and Commodities transaction which has not yet been opened, or close any open CFD, Margin FX and Commodities, where the underlying asset is the subject of a trading halt, or suspension, or is delisted. In addition if the Share CFD is over a security which ceases to be quoted on the Relevant Exchange or is suspended from quotation for three consecutive Business Days on that exchange, or such lesser period agreed between you and GTL Tradeup, GTL Tradeup has a discretion whether to close the Share CFD. Foreign exchange markets trade continuously. They open at 5:00pm American EST 1 Sunday evening (Monday morning NZ time) and close at 5:00pm, American EST 2 on Friday (Saturday morning NZ time). They are open 24 hours during this period. Prices are continuously streamed during this period. Because foreign exchange is not an exchange-traded product, it is not possible to suspend the assets prices. Benchmark 7: Margin Calls The margin call policy for GTL Tradeup s Over-The-Counter (OTC) Derivative products when trading from a GTL Tradeup platform is an automated process. When margin call occurs while trading on a GTL Tradeup platform all open positions are closed without bias. Please take note that GTL Tradeup advocate appropriate risk management such as placing stop losses which reduces the possibility of reaching margin call on trading accounts. 1 Eastern Standard Time (America) 2 Eastern Standard Time (America) 7

8 Trading in CFDs and Margin FX involves the risk of losing substantially more than your initial investment. GTL Tradeup s trading platforms deal with margin call issues at 2 important stages. These are: 1. At Margin Call Notification stage; 2. At Liquidation stage. Margin Call Notification At a Current Margin of 80% GTL Tradeup s first warning is sent to notify clients that they are getting close to automatic trade liquidation. An automated is sent to a client s nominated account. This discloses that a client has been issued with a Margin Call Notification. An Account Balance is provided along with Unrealised Profit/Loss (P/L) and Margin Used. At this point a client is requested to deposit additional funds into their account or instructed to reduce/close out current Open Positions. Clients are also warned that if their account reaches a Current Margin of 100%, their positions may be liquidated without further reference to the client. Further account funding details are also supplied with the automated Margin Call Notification (see an example below). Once an account reaches a Margin Call Warning Level, it is of course possible that the position may fall back below the 80% current margin level. Subsequently should this happen the margin call process will reset. If margin call levels are reached again the margin call process will start again. Liquidation When an account reaches the 100% current margin level, all current open positions are cut automatically without bias. This means that no matter when the trade was initiated or if it is in a profit or loss position it will be terminated. At this stage no further automated notifications s are sent out to clients informing them that their positions have been cut. Clients will be able to see their positions have been closed by logging into their trading account on the GTL Tradeup trading platform. Opening New Trades If when entering into a new trade you do not have enough initial margin the GTL Tradeup platform will not allow the trade to be process. 2. Description of CFDs, Margin FX and Commodities issued by GTL Tradeup 2.1 About GTL Tradeup GTL Tradeup is the issuer of this PDS and provides wholesale liquidity and platform services to institutions and professional traders globally. GTL Tradeup provides clients with institutional trading and brokerage services specialising in Derivatives and CFDs, Margin FX and Commodities to the professional traders market. The GTL Tradeup wholesale platform is ideally suited to Introducing Brokers, Professional Money Managers and Hedge Funds. We provide institutional and sophisticated traders access to dedicated liquidity pools through our propriety FIX servers and algorithms; a move beyond the traditional ECN liquidity offering. GTL Tradeup s Order Management System (OMS) provides connectivity to multiple Tier 1 banks, brokers and hedge funds using our unique first look protocol. GTL Tradeup provides institutional trading and broking services across a suite of technology-driven trading platforms providing algorithmic liquidity solutions. GTL Tradeup services customers with offices in Dubai, London and Sydney. 2.2 Reference Asset The reference asset for the CFDs, Margin FX and Commodities offered under this PDS is an underlying asset which is quoted on ASX. 2.3 Opening a CFD, Margin FX and Commodities account 8

9 Before you enter into any CFD with GTL Tradeup you will be required to complete, sign and return a CFD, Margin FX and Commodities customer agreement and open a CFD, Margin FX and Commodities account (if you have not already done so). GTL Tradeup reserves the right to refuse to open a CFD, Margin FX and Commodities account for any persons. You must deposit the Minimum Deposit Amount as notified to you by GTL Tradeup into your CFD, Margin FX and Commodities account to activate your CFD, Margin FX and Commodities account. 2.4 Establishing a CFD position To enter into a CFD, Margin FX and Commodities transaction (i.e. to open or establish a CFD, Margin FX and Commodities position), you can contact GTL Tradeup either electronically or by phone, or in any other manner acceptable to GTL Tradeup to determine the price of a CFD, Margin FX or Commodities in relation to an underlying asset. The CFD, Margin FX and Commodities Contract Value will be determined by multiplying the number of the underlying asset to which the CFD, Margin FX and Commodities applies by the price of the underlying asset quoted on the Relevant Exchange (if applicable). GTL Tradeup will inform you of the relevant price and the Initial Margin rate and you may make an offer to enter into a CFD, Margin FX or Commodities transaction with GTL Tradeup based on that price. You must confirm with us that offers sent via or fax has in fact been received by us. GTL Tradeup will confirm any CFD, Margin FX and Commodities transaction it enters into with you. Under the CFD, Margin FX and Commodities customer agreement, GTL Tradeup has sole discretion whether or not to accept an offer from you to enter into a CFD, Margin FX and Commodities. GTL Tradeup may refuse to enter into a CFD, Margin FX and Commodities for a variety of reasons, including, for example, where you have exceeded limits imposed by GTL Tradeup on your CFD, Margin FX and Commodities account or where GTL Tradeup does not hold sufficient cleared funds from you for the amount of the Initial Margin. You can take both long and short CFD, Margin FX and Commodities positions. If you take a long position, you profit from a rise in the underlying asset s price, and you will make a loss if the underlying asset s price falls. Conversely, if you take a short position, you profit from a fall in the underlying asset s price, and you make a loss if the underlying asset s price rises. You will be charged commission on establishing a CFD, Margin FX and Commodities position. See section 5.1. GTL Tradeup may at any time notify you of an exposure limit beyond which you may not be authorised to enter into further CFDs, Margin FX and Commodities, Margin FX and Commodities. 2.5 Margins Entry into CFDs, Margin FX and Commodities involves the payment of margin. There are three components of margin that you may be required to pay in connection with each CFD, Margin FX and Commodities: Initial Margin, Variation Margin and Additional Margin Initial Margin Initial Margin which is payable in respect of a CFD, Margin FX and Commodities will fluctuate daily depending on the Contract Value of the CFD and will be debited from your CFD, Margin FX and Commodities account. The Initial Margin represents the security deposit that you are required to provide to GTL Tradeup when you first open a CFD, Margin FX and Commodities position and thereafter throughout the term of a CFD, Margin FX and Commodities. The Initial Margin rate applicable to each CFD, Margin FX and Commodities is determined by GTL Tradeup in its sole discretion. It is typically between 10%-35% of the Contract Value of a Share CFD but may be as low as 1% for a Margin FX or Commodity and can be as high as 100% of the Contract Value depending on the volatility of the relevant market and the liquidity of the underlying asset. GTL Tradeup may vary the Initial Margin rate at any time and will notify you of the new Initial Margin rate by telephone, SMS or . Any additional Initial Margin resulting from an increase in the Initial Margin rate is payable within 24 hours. An indication of the Initial Margin rate which may apply to certain types of CFD, Margin FX and Commodities transactions can be obtained from GTL Tradeup s website ( GTL Tradeup s Internet Trading Platform or from your adviser Variation Margin 9

10 Variation Margin is the unrealised profit or loss on your open position. Following the close of business on each Business Day during the term of a CFD, Margin FX and Commodities, GTL Tradeup (as the calculation agent) will determine the Contract Value of the CFD, Margin FX and Commodities as at the close of business on such Business Day. This will ordinarily be the closing price quoted by the Relevant Exchange. Where GTL Tradeup determines that the closing price cannot be determined on that basis it will determine the value in its discretion. Where trading in the underlying asset is suspended or halted by the relevant exchange, the CFD, Margin FX and Commodities position will be valued and a closing price will be determined by GTL Tradeup. If the Contract Value at the close of business on a Business Day is greater than the Contract Value determined at the close of business on the previous Business Day, and you hold a short position in the CFD, GTL Tradeup will debit the difference between the values from your CFD, Margin FX and Commodities account. If the Contract Value is less than the Contract Value at the close of business on the previous Business Day and you hold a short position GTL Tradeup will credit the difference between the Contract Values to your CFD, Margin FX and Commodities account. If the Contact Value at the close of business on a Business Day is greater than the Contract Value determined at the close of business on the previous Business Day and you hold a long position in the CFD, Margin FX and Commodities GTL Tradeup will credit the difference between the Contract Values to your CFD, Margin FX and Commodities account. If the Contract Value is less than the Contract Value as at the close of business on the previous Business Day, GTL Tradeup will debit the difference between the Contract Values from your CFD, Margin FX and Commodities account. Any such amounts debited or credited to your account are referred to as Variation Margin. When a payment for difference is made GTL Tradeup will credit to your CFD, Margin FX and Commodities account any amount payable by GTL Tradeup. If an amount is payable by you, GTL Tradeup will debit such amount from your CFD, Margin FX and Commodities account. If the funds in your CFD, Margin FX and Commodities account are insufficient to cover any amount payable by you, you must pay to GTL Tradeup the specified amount in cleared funds within 24 hours (or such lesser time as GTL Tradeup may determine) of being advised of that amount so payable Additional Margin GTL Tradeup may require the payment of additional margin during the term of the CFD, Margin FX and Commodities contract, in addition to the Initial Margin and Variation Margin, including, without limitation, if the GLV in your account falls below $1,000 (as determined by GTL Tradeup in its sole discretion) or if the Free Equity in your CFD, Margin FX and Commodities account is not sufficient to meet all payments when due. This is referred to as Additional Margin. GTL Tradeup will determine the amount of any Additional Margin required in its sole discretion and will notify you of the requirement to pay Additional Margin by telephone, SMS or . The amount of Additional Margin called will generally be the amount required to make the Free Equity in your CFD, Margin FX and Commodities account positive. Margin calls for Additional Margin must be met within 24 hours of GTL Tradeup making the margin call. In some situations GTL Tradeup may require payment within a shorter time period (for example when there is unusual volatility). If you fail to make margin payments in respect of Additional Margin within the time specified by GTL Tradeup, GTL Tradeup may close out open CFD, Margin FX and Commodities positions without further notice to you. Alternatively, GTL Tradeup may partially close out an open CFD, Margin FX and Commodities position by closing it out in respect of some (but not all) of the underlying securities to which the CFD, Margin FX and Commodities applies without further notice to you. For example, if you have an open long position in respect of a Share CFD where the underlying asset is 1,000 shares in XYZ Inc., GTL Tradeup may close out your position in relation to 500 of the underlying shares in XYZ Ltd and the Share CFD will remain open in respect of the remaining 500 shares in XYZ Inc. The Gross Liquidation Value (GLV) of your CFD, Margin FX and Commodities account is the amount of money you would have in your CFD, Margin FX and Commodities account were you to close out all positions at the current market price (less any transaction charges or adjustments). The Free Equity balance of your CFD, Margin FX and Commodities account is the GLV less the Initial Margin, Additional Margin and any commission, fees and interest amounts payable by you to GTL Tradeup in connection with a CFD, Margin FX and Commodities. Free Equity can be utilised to enter into further CFD, Margin FX and Commodities positions or can be withdrawn from your CFD, Margin FX and Commodities account, if GTL Tradeup consents in its discretion to such withdrawal. 2.6 Closing a CFD, Margin FX and Commodities 10

11 CFDs, Margin FX and Commodities in respect of an underlying asset which may be quoted on an underlying exchange do not have an expiry date. Rather, they remain open until they are closed in accordance with the terms of the CFD, Margin FX and Commodities customer agreement, as discussed below You wish to close a CFD, Margin FX and Commodities Since the CFDs, Margin FX and Commodities are issued by GTL Tradeup over the counter or OTC and not through a physical exchange such as a stock exchange. The CFD, Margin FX and Commodity is a contract between you and GTL Tradeup and can only be closed in accordance with the terms of the CFD, Margin FX and Commodities customer agreement or as otherwise agreed between you and GTL Tradeup. It is not possible to close the CFD by giving instructions to another broker or Australian financial services licensee. To close a CFD position you should contact GTL Tradeup, either electronically, by telephone, fax or by , to determine the current market price quoted on the Relevant Exchange for the underlying asset. GTL Tradeup will confirm the current market price and you will then decide whether to accept the price, and if so, you will instruct GTL Tradeup to close your open position on the basis of that price. You must confirm with us that instructions sent via or fax has in fact been received by us. The total closing value is then determined by multiplying the number of the underlying asset to which the CFD, Margin FX and Commodities applies by that price of the underlying asset. You may not be able to close out a CFD, Margin FX and Commodities if there is a suspension of trading or a trading halt in respect of the underlying asset to which a CFD, Margin FX and Commodities applies. In such a circumstance, GTL Tradeup may decide in its absolute discretion not to close a CFD, Margin FX and Commodities GTL Tradeup wishes to close a CFD, Margin FX and Commodities GTL Tradeup has the right to close out a CFD, Margin FX and Commodities in certain circumstances. This includes the occurrence of certain events in relation to the underlying asset, see for example section 2.8, or if the aggregate amount of Variation Margin payable by you in relation to a CFD, Margin FX and Commodities exceeds 50% of the Initial Margin in respect of that CFD, or if a default event occurs in relation to you, as set out in section 2.14, or if you have breached any exposure limit set by GTL Tradeup. In addition, if GTL Tradeup enters into a CFD, Margin FX and Commodities transaction or other instrument with a third party to hedge its exposure under a CFD, Margin FX and Commodities entered into with you (Hedge Position) and that third party unwinds or closes out the Hedge Position or for any other reason GTL Tradeup is no longer able to maintain the Hedge Position (for example, in the case of short Share CFDs where GTL Tradeup has entered into a stock lending agreement, if it is no longer possible to borrow the stock or the lender recalls the stock under the relevant stock lending agreement) GTL Tradeup has the right to close out the Share CFD with you to which such Hedge Position relates, at any time. You should refer to the CFD, Margin FX and Commodities customer agreement for further information Consequences of closing a CFD, Margin FX and Commodities As at the close of business on the day that the CFD, Margin FX and Commodities is closed out, GTL Tradeup will calculate the remaining payment rights and obligations of you and GTL Tradeup based on the difference between the Closing Value of the CFD, Margin FX and Commodities and the Open Contract Value of the CFD, Margin FX and Commodities. The amount payable by you to GTL Tradeup or by GTL Tradeup to you on close out of the CFD, Margin FX and Commodities will be determined by GTL Tradeup after taking into account the Initial Margin, any Variation Margin and any Additional Margin which has already been debited from or credited to your CFD, Margin FX and Commodities account in respect of that CFD, Margin FX and Commodities. Under the terms of the CFD, Margin FX and Commodities customer agreement GTL Tradeup will credit to your account any amounts payable by GTL Tradeup to you. In the event there is a corporate action affecting the underlying asset at the time you close a Share CFD, there may be a delay in GTL Tradeup crediting your account until the effect of the corporate action is determined. If an amount is payable by you to GTL Tradeup it will be debited from your CFD, Margin FX and Commodities account. If the funds in your CFD, Margin FX and Commodities account are insufficient to cover such payment, you must pay such amount to GTL Tradeup, within 24 hours of being so advised (or within such lesser period as GTL Tradeup may determine in its discretion) and in such currency as GTL Tradeup may require, the amount owing. You should note that GTL Tradeup may set off any money owed to you under the CFD, Margin FX and Commodities customer agreement or any other agreement against any 11

12 money owed by you to GTL Tradeup. The determination of the date on which a CFD, Margin FX and Commodities is closed and the Closing Value of a CFD, Margin FX and Commodities may be affected by certain events including but not limited to: if the CFD is over shares in a company which becomes externally administered, GTL Tradeup has broad discretion in relation to the Share CFD and may choose to close the Share CFD at any time. GTL Tradeup s decision as to whether to close the Share CFD may differ depending on whether you hold a short or a long position. If GTL Tradeup elects to close the CFD it will determine the Closing Price having regard to any factors it considers appropriate including the last traded price of the underlying asset. If you hold a long position, the Closing Price determined by GTL Tradeup may be zero. If the Closing Price is zero, through payment of the Initial Margin, Variation Margin and payments due on close out of the CFD, Margin FX and Commodities, you will be required to pay GTL Tradeup an amount representing the Contract Value of the CFD, Margin FX and Commodities at the time you opened the CFD, Margin FX and Commodities. In effect, this is substantially equivalent to having paid the full purchase price of the underlying asset to GTL Tradeup for the position, which would then be worthless, that is, valued at zero. If you hold a short position and GTL Tradeup elects to close the CFD, Margin FX and Commodities, the Closing Price will be determined by GTL Tradeup in its sole discretion and, if the underlying asset has been suspended from trading, may have regard to the Contract Security Price of such security at the time it was suspended; if GTL Tradeup has entered into a Hedge Position in relation to the CFD, Margin FX and Commodities, GTL Tradeup may take into account whether its counterparty under the Hedge Position closes the CFD, Margin FX and Commodities and the price at which the Hedge Counterparty does so in determining whether to close the CFD, Margin FX and Commodities with you and the Closing Price of your CFD, Margin FX and Commodities; if the CFD is over an underlying asset which ceases to be quoted on the Relevant Exchange or is suspended from quotation for three consecutive Business Days (or such lesser period as may be agreed with you), GTL Tradeup may elect to close the CFD, Margin FX and Commodities and/or call Additional Margin as determined by GTL Tradeup. If GTL Tradeup elects to close the CFD, Margin FX and Commodities, GTL Tradeup will determine the Closing Price and in making such determination, will, in its discretion, have regard to a number of factors including the last traded price of the underlying asset on the Relevant Exchange; if the CFD is over shares in a company which becomes the subject of a takeover offer, GTL Tradeup may give notice of its intention to close the CFD. If this happens, GTL Tradeup will determine the Closing Price in its discretion. The Closing Price will usually be determined based on the terms of the takeover offer; if the CFD, Margin FX and Commodities is over an underlying asset in respect of which there is a suspension of trading or a trading halt on the Relevant Exchange, GTL Tradeup will determine the Closing Price in its discretion. If you hold a long position, the Closing Price determined by GTL Tradeup may be zero. If the Closing Price is zero, through payment of the Initial Margin, Variation Margin and payments due on close out of the CFD, Margin FX and Commodities, you will be required to pay GTL Tradeup an amount representing 100% of the Contract Value of the CFD, Margin FX and Commodities at the time you opened the CFD, Margin FX and Commodities; and if an amount payable by you in relation to a CFD, Margin FX and Commodities exceeds 50% of the Initial Margin in respect of that CFD, Margin FX and Commodities, GTL Tradeup may close out the CFD, Margin FX and Commodities as if a Default Event has occurred. For further information on Default Events, see section Deposits and Withdrawals In order to activate your CFD, Margin FX and Commodities account you must deposit at least the Minimum Deposit Amount into your CFD, Margin FX and Commodities account. Once the CFD, Margin FX and Commodities account has been activated there is no minimum account balance required. However, if you enter into a CFD, Margin FX and Commodities you must ensure that the amount in your CFD, Margin FX and Commodities account is sufficient to meet all payment obligations when due. You may request a withdrawal of funds from your CFD, Margin FX and Commodities account by contacting GTL Tradeup either electronically, by telephone, fax or , or in any other manner acceptable 12

13 to GTL Tradeup. If GTL Tradeup receives a withdrawal request it will determine in its absolute discretion whether to agree to such a withdrawal. 2.8 Adjustments / Corporate Actions When an underlying asset is affected by a corporate action (such as a special dividend, subdivision, consolidation, bonus issue of shares, or any analogous event which dilutes or concentrates the value of the underlying asset), or if any other event occurs in respect of which GTL Tradeup determines in its discretion that an adjustment is appropriate, GTL Tradeup has a broad discretion to deal with your orders and CFD positions and may vary the terms of your orders and CFDs, Margin FX and Commodities, Margin FX and Commodities. Under the terms of the CFD, Margin FX and Commodities customer agreement GTL Tradeup shall determine the appropriate adjustment (if any) to the Contract Value of an underlying asset which is affected by a corporate action or other adjustment event and/or to the related quantity of securities to which the CFD relates. Any determination GTL Tradeup makes in relation to corporate actions is binding on you. You should note that GTL Tradeup may have regard to any adjustments to its Hedge Position in determining adjustments to the terms of your CFDs, Margin FX and Commodities or orders. Certain corporate actions or other adjustment events may not apply to GTL Tradeup s Hedge Position, for example if a particular corporate action is only available to retail clients (GTL Tradeup is not a retail client under its Hedge Position) or to investors who hold a particular amount of the relevant underlying asset. Accordingly, as a general principle if a corporate action or other adjustment event occurs in respect of an underlying asset to which your CFD relates, but GTL Tradeup s Hedge Position is not adjusted, GTL Tradeup will not adjust your CFD or order (for both long and short positions). You should be aware that if GTL Tradeup determines that it is not reasonably practicable in the circumstances to make an adjustment to the CFD, GTL Tradeup may give you notice of its intention to close the CFD. 2.9 Dividends / Distributions Holders of long Share CFD positions will receive from GTL Tradeup the value of cash dividends or distributions (without franking credits) paid to holders of the underlying asset based on the number of securities to which the Share CFD relates on close of business on the Business Day immediately preceding the ex-dividend or distribution date. Holders of short Share CFD positions must pay to GTL Tradeup a cash amount equal to the value of the dividend or distribution (plus, in some circumstances, the value of any franking credits applicable to that dividend or distribution) paid to the holders of the underlying asset based on the number of securities to which the Share CFD relates on close of business on the local Business Day immediately preceding the ex-dividend or distribution date Imputation Credits on Dividends Where you hold a short Share CFD position in relation to an Australian-based underlying asset, GTL Tradeup will seek on a reasonable endeavour basis to borrow stock from an offshore lender who is not a resident of Australia for Australian tax purposes to facilitate the hedging of GTL Tradeup s exposure to that short position. However, if offshore borrowing is unavailable and an Australian-based underlying asset pays a franked dividend or a distribution which includes a franked dividend, the relevant dividend amount debited to your CFD, Margin FX and Commodities account will include the value of any related franking credit, as well as the value of the cash dividend Stock Bans GTL Tradeup may at any time determine, in its absolute discretion, that it will not permit the entry into Share CFDs over one or more underlying securities Contingent Orders and Stop Loss Orders Contingent Orders are orders that you can create that will be placed when specific market conditions are met. For example, you can create a contingent order to close out a long CFD, Margin FX and Commodities position when the Contract Security falls to a certain price. This is known as a Stop Loss order, and may be used to help manage your CFD, Margin FX and Commodities positions. You must be aware, however, that contingent orders are not guaranteed. 13