Scoach Switzerland Ltd General Conditions Version: 06.03.2009 Date of entry into force: 01.04.2009
Scoach Switzerland Ltd Page i TABLE OF CONTENTS 1. Admission to trading on SCOACH as a Participant... 1 1.1 Approval as securities traders as requirement for the admission as participant... 1 1.2 Application for admission... 1 1.3 Own funds... 1 1.4 Conditions for use of the SWXess trading platform... 2 1.5 Technical interconnection with the SWXess trading platform... 2 1.6 Participation in settlement organizations (Power of attorney)... 3 1.7 Traders... 3 1.8 Requirements for traders... 3 1.9 Proprietary automated applications... 3 1.10 Suspension and revocation of registration... 4 1.11 Duty to provide information... 4 1.12 Inspection right of SCOACH... 5 1.13 Use and transmission of information... 6 1.14 Fees... 6 1.15 Rules of conduct... 7 1.16 Prohibition of market manipulation... 7 1.17 Pre-arranged trades... 8 1.18 Liability of SCOACH... 9 1.19 Liability of participants... 9 1.20 Sanctioning measures... 9 1.21 Suspension...11 1.22 Termination of participation by expulsion...11 1.23 Termination of participation by resignation...12 2. Provisions governing trading...12 2.1 General principles of trading...12 2.2 Instructions in the event of mistrades...12 2.3 Principle of equal treatment...12 2.4 Exchange days...13 2.5 Exchange hours...13 2.6 Segments...14 2.7 On and off order book trades...14 2.8 Duty to trade on order book...14 2.9 Orders and quotes...15 2.10 Substance of on order book trading...15 2.11 Order books...15 2.12 Dependencies...16 2.13 Normal Order...16 2.14 Accept order...16 2.15 Fill or Kill order...16 2.16 Price Steps...16
Scoach Switzerland Ltd Page ii 2.17 Round Lots...16 2.18 Reference price...17 2.19 Price determination in exchange trading...17 2.20 Subject of off order book trading...18 2.21 Trade Confirmation...18 2.22 Trade Report...18 2.23 Delivery and payment...19 2.24 Extraordinary situations...19 2.25 Emergency situations in general...20 2.26 Failure of the Exchange System...21 2.27 Failure of participants access systems...21 2.28 Post-recording procedure...21 2.29 Deletion of orders and quotes by SCOACH...21 2.30 Settlement in cases of failure of the Exchange System or parts thereof or participants access systems...22 2.31 Principle of reporting...22 2.32 Reporting of on order book trades...22 2.33 Reporting deadline for off order book trades...22 2.34 Sensitive block transactions...22 2.35 Principle of utilization, dissemination and publication of data...22 2.36 Information for participants and the public...23 2.37 Market supervision...23 2.38 Provisions governing market making...24 2.39 Stamp duty...24 3. Provisions governing customs and usages...26 3.1 Purpose...26 3.2 Legal effect of purchase...26 3.3 Transfer and payment of securities...27 3.4 Notice of defects and right to an exchange...27 3.5 Deprivation of property by a third party...28 3.6 Trading in warrants...28 3.7 Non-performing bonds...28 3.8 Drawable and drawn bonds...28 3.9 Conversion rate for foreign currency bonds...29 3.10 Invalidated or blocked securities...29 3.11 Definition of on order book trading...30 3.12 Delivery and payment...30 3.13 Forced settlement in the event of non-performance...30 3.14 Consequences of forced settlement...31 3.15 Confirmation of Execution...31 3.16 Delivery and payment...31 4. General Provisions and place of jurisdiction...33 4.1 Amendments to the General Conditions...33 4.2 Applicable law...33 4.3 Court of arbitration and place of jurisdiction...33 4.4 Binding character...33
Scoach Switzerland Ltd Page iii 5. Transitional provisions...34
Scoach Switzerland Ltd Page 1 1. ADMISSION TO TRADING ON SCOACH AS A PARTICIPANT These provisions govern the requirements for admission to trading on Scoach Switzerland Ltd ("SCOACH"). 1.1 Approval as securities traders as requirement for the admission as participant Only institutions that have received approval as securities traders within the context of the Federal Act on Stock Exchanges and Securities Trading may be admitted as a participant of SCOACH. SCOACH may make the admission of foreign-based participants contingent on whether their country of domicile grants Swiss-based participants of SCOACH genuine access to its exchanges and offers them the same conditions of competition. SCOACH may refuse or revoke admission if it deems the functioning of the Exchange to be jeopardized by participation. 1.2 Application for admission Participation in SIX Swiss Exchange AG ("SIX Swiss Exchange") is a prerequisite for participation in SCOACH. Prospective participants must submit a written application for admission, the form and content of which shall be determined by SCOACH. 1.3 Own funds A participant must have a published capital (own funds) of at least CHF 10 million within the context of the Swiss Banking Ordinance. The participant must comply with the provisions of the Swiss Banking Act and Banking Ordinance pertaining to capital, liquidity, risk diversification and loans to governing bodies. Point 1.3, paras 1 and 2 shall apply by analogy to participants domiciled abroad.
Scoach Switzerland Ltd Page 2 1.4 Conditions for use of the SWXess trading platform Authorization to use the SWXess trading platform shall be subject to the following conditions: a. The participant must fulfil the prescribed technical requirements; SCOACH may permit the participant to connect to the SWXess trading platform via an SCOACH-approved provider. The participant is entitled to develop and use its own internal applications, provided that these do not jeopardize the operation of the SWXess trading platform. Should in the opinion of SCOACH a participant s own applications jeopardize the operation of the SWXess trading platform, SCOACH may prohibit their use. b. The participant must, directly or indirectly, have an account with a settlement organization recognized by SCOACH. c. The participant must register all persons with SCOACH who have access to the system in their capacity as dealers. Trade confirmations, trade reports and post-recorded trades may also be entered by non-registered traders. d. The participant must register with SCOACH any proprietary automated applications it uses for trading on SCOACH. 1.5 Technical interconnection with the SWXess trading platform Technical interconnection with the SCOACH Exchange is accomplished via the connectivity concept of the SIX Swiss Exchange. The SWXess trading platform includes the following systems: Exchange System; as well as SCOACH access infrastructure. The hardware used on the participant side shall be chosen by the participant at is own responsibility.
Scoach Switzerland Ltd Page 3 By means of Directives, SCOACH regulates access to certain functional features of the SWXess trading platform. 1.6 Participation in settlement organizations (Power of attorney) The participant must participate in a settlement organization recognized by SCOACH. The participant shall give SCOACH a power of attorney conferring upon SCOACH the right to relay settlement instructions to SIS SegaInterSettle Ltd. and other SCOACH-recognized settlement organizations in the name and on behalf of the participant, provided that the latter declares that it has a contractual relationship with these institutions. SCOACH shall set out the details in Directives. 1.7 Traders Traders are natural persons who may, on behalf of and under the responsibility of a participant, access the order books of SCOACH, submit (whether directly or via automatic mechanisms) orders and/or quotes and use the pre- and post-trade functions. 1.8 Requirements for traders Registration as a trader with the SIX Swiss Exchange is a prerequisite for registration with SCOACH. Traders must have a good reputation and sufficient professional knowledge. The required professional knowledge shall be evidenced by passing the SIX Swiss Exchange trader examination (trader's licence). SCOACH may also recognize equivalent examinations. Traders operating for a participant in SCOACH must be subject to the direct authority of said participant for the duration of their trading activities. The SIX Swiss Exchange will regulate the details of registration and the trader examination in Directives. 1.9 Proprietary automated applications Proprietary automated applications are facilities allowing orders to be routed automatically to the Exchange System.
Scoach Switzerland Ltd Page 4 Registration with the SIX Swiss Exchange of the utilized order systems is a prerequisite for registering such proprietary automated applications with SCOACH. The SIX Swiss Exchange assigns an identification number to each proprietary automated application. The participant receives confirmation of the registration of the proprietary automated applications in writing. At the same time, the participant is notified of the identification number. The participant is required to ensure that the identification numbers of its registered proprietary automated applications are not misused. The participant is responsible for all entries added to the Exchange System via its proprietary automated applications. The parameterization of proprietary automated applications is reserved for registered traders SCOACH shall set out further the details in Directives or other forms of publication. 1.10 Suspension and revocation of registration SCOACH may suspend or revoke the registration of traders and proprietary automated applications in the event of violations of SCOACH rules and regulations, in cases where a requirement for registration is not fulfilled, or while criminal proceedings are pending. Such a sanction also has an impact on registration with the SIX Swiss Exchange. The participant is obliged to ensure immediately that the trader or proprietary automated application concerned no longer has access to the SWXess trading platform. 1.11 Duty to provide information Participants shall notify the SIX Swiss Exchange immediately if one of their registered traders or they themselves violate or cannot comply with SCOACH rules and regulations. Notification is also required in the event of violation or non-observance of rules and regulations when using registered proprietary automated applications.
Scoach Switzerland Ltd Page 5 Participants are further obliged, subject to bank secrecy, to supply SCOACH and the competent auditors with all the information necessary to maintain an orderly market and ensure enforcement of the relevant securities exchange legislation, rules and regulations. SCOACH may at any time require participants to instruct their internal and/or external auditors to examine some or all business procedures and/or transactions of the participant for ascertaining compliance with the relevant securities exchange legislation, the rules and regulations, and to furnish SCOACH with a summary report. The report must be compiled with due observance of bank secrecy. Participants domiciled abroad must appoint auditors recognized by the relevant foreign supervisory authority or legislature that are authorized to check banks and financial companies and/or securities dealers. Auditors must be recognized by the Swiss or the responsible foreign supervisory authority or the Swiss or relevant foreign legislative body in order to be authorized. If the participant does not designate such auditors, SCOACH shall appoint them. SCOACH is entitled to provide information to the competent foreign authorities on a participant domiciled abroad. The participant shall bear the cost of the examinations required by SCOACH. SCOACH shall treat reports and information received from participants or auditors confidentially. 1.12 Inspection right of SCOACH SCOACH shall have the right to monitor a participant s compliance with statutory, contractual and software license provisions as well as to examine and test the hardware and software installed with the participant and the proper use of the data of SCOACH at any time. The participant must grant the persons conducting the inspection access to all documents and furnish them with the information necessary for them to perform the audit. SCOACH may charge the costs of such inspections to participants found to have violated the above said provisions.
Scoach Switzerland Ltd Page 6 Examinations and tests of hardware and software shall be notified in advance and conducted in the presence of a representative of the participant, without undue disturbance for the participant. SCOACH shall keep its findings confidential. 1.13 Use and transmission of information SCOACH may use, analyse and process all data entered into the SWXess trading platform by participants. It is entitled to publish such data. However, it may not reveal the identity of participants without their consent. SCOACH shall keep all individual data which a participant enters into the Exchange System confidential, unless the disclosure of such information is prescribed by law. Notwithstanding the foregoing, SCOACH may disclose on a need-to-know basis any data to its affiliates, to its parent company/companies and/or any of the latter s affiliates (directly or indirectly controlled), to third parties, provided that SCOACH shall cause such companies to be bound to the comparable obligations on non-disclosure as those set out under these General Conditions. 1.14 Fees Participants are obliged to pay SCOACH fees for: a. trading of securities; b. first-time admission of participants to Exchange trading; c. maintenance of admission to Exchange trading; d. use of the SWXess trading platform; e. dedicated capacity for the SWXess trading platform; f. excessive use of the order-driven part of the Exchange System; g. data transmission;
Scoach Switzerland Ltd Page 7 h. extraordinary supervisory costs caused by a participant; i. extraordinary investigation costs caused by a participant; j. provision of data. SCOACH shall stipulate the amount of the fees and the collection procedures in Directives or other publications which it deems suitable. SCOACH may demand interest in arrears and reimbursement of expenses for any payments received late. 1.15 Rules of conduct Participants shall adopt internal regulations and personnel management policies to ensure implementation of: a. the rules of conduct for securities trading pursuant to Article 11 of the Stock Exchange Act, Circular 2008/38 Market Behaviour Rules of FINMA and the relevant canons of professional ethics; b. fair and transparent trading in the best possible interest of clients, and promotion of market integrity; c. the exercise of due professional expertise, care and conscientiousness. 1.16 Prohibition of market manipulation Securities transactions must have an economic rationale and correspond to genuine supply and demand circumstances. Securities transactions or mere order entries made to give the impression of market activities or to distort market liquidity, market prices or the valuation of securities, as well as fictitious transactions and orders are not permissible (market manipulation). Participants are obliged in particular
Scoach Switzerland Ltd Page 8 a. to refrain from unfair trading practices on SCOACH or in combination with practices on SIX Swiss Exchange; b. to avoid acts or omissions which, in the opinion of SCOACH, adversely affect the integrity of the Exchange. Not deemed to fall under the prohibition of market manipulation within this context are those equal-butopposite Exchange transactions executed by a single participant for its nostro account that can be triggered by the internal technical interconnection structures of its various trading divisions, provided that the participant can prove that it has crossed the orders via the trading platform SWX Platform completely independent of each other and without having conducted any prior discussion whatsoever with regard to their execution. Such proof shall be recognized if the participant provides SCOACH in advance with a written description of its internal technical interconnection structure. Each of its orders must then include an identifier code that corresponds to the specific interconnection structure. SCOACH shall set out the details in a Directive. 1.17 Pre-arranged trades Pre-arranged crosses of equal-but-opposite client orders as well as transactions executed between client accounts and the nostro account of the same participant or prearranged trades with other participants, are to be reported as off order book trades in compliance with Point 2.8, herein, by means of the reporting functional feature made available by SCOACH. If the client or participant desires that such a prearranged transaction (regardless of whether it is below or above the obligatory Exchange limit) be executed on order book already during trading hours, then there must be at minimum a 15-second delay between the entry of the client order and the subsequent equal-but-opposite buy or sell order. Offsetting orders on behalf of a client, in which beneficial ownership does not change, are also prohibited.
Scoach Switzerland Ltd Page 9 The participant shall ensure that it remains in compliance with the provisions of this clause even when the use of an order-routing system has been contractually permitted. 1.18 Liability of SCOACH Subject to gross negligence or intent, SCOACH shall, in particular, not be liable for damage incurred by a participant, its clients or third parties due to: a. partial or total unavailability of the SWXess trading platform; b. defectiveness of the hardware and software supplied; c. wrong or incomplete processing or transmission of data; d. erroneous actions by participants or third parties; e. measures taken within the framework of an emergency procedure; f. other system failures or technical problems. 1.19 Liability of participants The participant alone shall be responsible and liable for persons who enter data into the Exchange System through its terminals. The participant shall also bear responsibility and liability for the acts and omissions of any provider the former may have commissioned. The participant is obliged to take the necessary measures itself to avoid claims for damages. 1.20 Sanctioning measures SCOACH may pronounce sanctions for the following acts or omissions of participants and/or registered traders: a. violation of relevant securities exchange legislation; b. violation of rules and regulations of SCOACH; c. breach of contractual agreements with SCOACH; d. non-compliance with instructions by SCOACH;
Scoach Switzerland Ltd Page 10 e. attempted or perpetrated breach of the security of the SWXess trading platform; f. attempted or perpetrated manipulations or modifications of the SWXess trading platform and, in particular, its technological interfaces; g. improper use or distribution of SCOACH software or data received from the SWXess trading platform; h. obstruction of internal or external auditors in the performance of their duties; i. non-observance of the arbitration procedure and non-compliance with an arbitral ruling; j. default in payment of fees charged by SCOACH. SCOACH may pronounce sanctions a. against participants: reprimand, suspension or expulsion of a participant, suspension or revocation of its proprietary automated applications; fines and/or contractual penalties of up to CHF 10 million. b. against registered traders: reprimand, suspension or revocation of the registration. When imposing sanctioning measures, SCOACH shall take into account the gravity of the offence and the degree of fault. The pronouncement of a sanction also has an effect on participation in the SIX Swiss Exchange. SCOACH may disclose the sanctioning measures taken by it against participants or registered traders, as well as the underlying violations, to participants and/or the public.
Scoach Switzerland Ltd Page 11 The sanctioning procedure is governed by special regulations. 1.21 Suspension In the event of gross violation of the rules and regulations of SCOACH, non-fulfilment of the requirements for granting an Exchange licence, or if a participant is no longer able to conduct its transactions properly, SCOACH may at any time bar the participant s access to the Exchange System and delete its orders or quotes after giving prior notice. If the participant complies with the instructions issued by SCOACH, the suspension may be revoked. Any pronouncement of a sanction also has an effect on participation in the SIX Swiss Exchange SCOACH shall publicize the suspension of a participant without delay. The participant concerned may appeal against the suspension to the Appeal Board of SCOACH and bring the latter s ruling on the matter before the SCOACH Board of Arbitration. The appeal shall have no suspensive effect, unless the Appeal Board or the Board of Arbitration decides otherwise. 1.22 Termination of participation by expulsion In the event of gross violation of the rules and regulations of SCOACH, institution of deferred payment, composition or liquidation proceedings, prolonged nonutilization of the Exchange System or subsequent nonfulfilment of the participation requirements, SCOACH may threaten the participant with expulsion and order provisional measures. If the instructions of SCOACH are not obeyed within the specified time limit, or if the setting of a time limit appears meaningless from the outset, SCOACH shall take a decision on expulsion and send the participant concerned written notification of the decision and the reasons for it. An appeal against the decision on expulsion shall not prevent SCOACH from ordering the suspension of the participant. SCOACH shall publicize the legally valid decision on the expulsion of a participant.
Scoach Switzerland Ltd Page 12 The pronouncement of a sanction also has an effect on participation in the SIX Swiss Exchange. 1.23 Termination of participation by resignation A participant or SCOACH may terminate the participation agreement at any time without stating any reasons. A notice period of four weeks must be observed. Obligations and rights in respect of fulfilment shall continue to apply regardless of the resignation. A termination of participation in SCOACH shall also result in a termination of participation in the SIX Swiss Exchange The participant must return all technical documents to SCOACH, unless the latter expressly states that they need not be returned. The resignation of a participant shall only become effective once all its obligations vis-à-vis SCOACH have been discharged. The obligation to pay stamp tax on the trading of securities shall continue until then. SCOACH shall decide for how long the resigning participant may use the Exchange System. SCOACH shall publicize the resignation of a participant. 2. PROVISIONS GOVERNING TRADING These provisions govern trading on SCOACH. 2.1 General principles of trading Participants and their registered traders are obliged to observe the rules and regulations of SCOACH, to act in accordance with generally recognized business practice and to comply with the decisions of SCOACH. 2.2 Instructions in the event of mistrades If SCOACH discovers a mistrade, it is authorized to instruct the relevant dealer to cancel the mistrade immediately. If the relevant dealer fails to comply with these instructions, SCOACH may apply sanctioning measures. 2.3 Principle of equal treatment The principle of equal treatment shall apply exclusively to the Exchange System, which ends at the physical exit to the SCOACH access infrastructure.
Scoach Switzerland Ltd Page 13 SCOACH shall ensure equal treatment of participants, based upon the following principles: a. all participants shall have the same opportunities of access to the functional features of the Exchange System; b. all market makers shall have the same opportunities of access to the functional features of the quote-driven Exchange System; c. data transmitted by the Exchange System shall be made available to all participants at the boundaries of the Exchange System simultaneously; d. participants entries shall be processed in the Exchange System in the order in which they are received; e. in the case of entries received simultaneously, the probability of one entry being processed first is the same for all such entries; f. the transaction identification number assigned by the Exchange System shall determine the order in which entries are received; g. price determination on order book trading shall take place for all participants in accordance with the same SCOACH matching rules. 2.4 Exchange days Trading on SCOACH shall take place daily from Monday to Friday (Exchange days). The Exchange System shall normally be closed on Saturdays, Sundays and Swiss public holidays (Exchange holidays). SCOACH reserves the right, subject to advance notice, not to make the Exchange System available on certain days or to offer additional Exchange days. 2.5 Exchange hours Exchange hours at SCOACH comprise the following trading periods:
Scoach Switzerland Ltd Page 14 a. pre-opening; b. opening; c. continuous trading; d. break; e. close of trading; f. post-trading SCOACH can set out the applicability, commencement, duration and sequence of the Exchange periods for the individual segments in Directives or other publications. The opening and continuous trading are designated as the trading period. 2.6 Segments SCOACH may allocate securities to a segment on the basis of various criteria (e.g. type of security, listing requirements, trading volume, trading hours, etc.). SCOACH can define the segments in Directives or other publications. 2.7 On and off order book trades On order book trades shall be trades in securities which are executed during the opening or continuous trading via the Matcher. Only such trades may be designated as on order book trades by participants. All other trades shall be off order book trades. 2.8 Duty to trade on order book During the trading period, participants are obliged to execute buy and sell orders on order book, i.e. to record them in the order books of SCOACH (duty to trade on the Exchange). The duty to trade on the Exchange shall be subject to the following exceptions: a. participants may execute individual orders off order book if their value exceeds the limits fixed by
Scoach Switzerland Ltd Page 15 SCOACH in Directives and if the resulting trades are not designated as on order book trades; b. participants may execute aggregated orders off order book for clients if their value exceeds the limits fixed by SCOACH in Directives and if the resulting trades are not designated as on order book trades; c. participants may execute orders for securities off order book if the securities are traded within the framework of a portfolio trade as defined by SCOACH in Directives and if the resulting trades are not designated as on order book trades. 2.9 Orders and quotes All orders and quotes entered shall be time-stamped and assigned a transaction identification number by the Exchange System. Orders or quotes for which not all the mandatory attributes are entered, or for which individual attributes are not entered properly, shall be rejected by the Exchange System. The attributes and the manner in which entries are to be made shall be defined by SCOACH in Directives. 2.10 Substance of on order book trading Only orders and quotes in securities traded on SCOACH which are payable and deliverable three business days after completion of the trade shall be the substance of on order book trading at SCOACH. An order or quote may be executed against numerous other orders and/or quotes at different prices. 2.11 Order books SCOACH shall maintain at least one order book for each security traded on the Exchange. All the orders and quotes entered for each traded security shall be classified and administered in such order book according to the price and time of entry of the order or quote. Order books may be inspected by all participants during Exchange hours, pursuant to Point 2.36 of these provisions. Each participant may consent to the disclosure of its identity in the order book upon entry of an order or quote.
Scoach Switzerland Ltd Page 16 Any non-openings or trading interventions shall also be recorded in the order books. 2.12 Dependencies SCOACH may establish dependencies for securities or segments, with the effect that trading in a dependent security or dependent segment shall only be opened or take place if the market in the underlying security or underlying segment is open. SCOACH can set out the details in Directives or other publications. 2.13 Normal Order A normal order is an order for the purchase or sale of a certain number of securities traded on SCOACH. 2.14 Accept order An accept order is an order to accept all orders in the order book which correspond to its attributes. Such an order is never recorded in the order book but executed immediately against all orders which correspond to its attributes and are already in the order book at the time of its entry. If the accept order is not executed at once or only partially executed, it or the remaining partial order is automatically cancelled by the Exchange System. 2.15 Fill or Kill order A fill or kill order is an order which is either executed in its entirety or automatically cancelled by the Exchange System. It is never recorded in the order book. 2.16 Price Steps Securities may only be traded in price steps, which can be set out by SCOACH in Directives or other publications. SCOACH shall advise participants of the entry into force of new price steps well in advance. 2.17 Round Lots Round lots are understood to be a certain nominal value or a certain number of securities. Only the trading of at least one round lot can lead to a new price for the security concerned. Round lots can be defined by SCOACH in Directives or other publications. SIX Swiss Exchange shall advise participants of the entry into force of new round lots well in advance.
Scoach Switzerland Ltd Page 17 2.18 Reference price The reference price serves as a comparative value or as the basis for different calculations by SCOACH, in particular the calculation of the opening price, as well as for delayed opening and stop trading. The reference price normally corresponds to the last price paid. In special cases, notably during capital restructuring operations or at the start of trading in new securities, SCOACH may set the reference price and enter it into the Exchange System. 2.19 Price determination in exchange trading For each exchange period, a price calculation is made in adherence with specific rules. The exchange prices are generally determined according to the following rules: All orders and quotes are arranged in the order book according to price and the time of receipt of the order or quote. Quotes may only be entered and cancelled by those participants who are authorized to make a market in keeping with the provisions of Point 2.38. During the pre-opening, participants may enter or cancel orders and quotes. For each security, a continuous calculation of the theoretical opening price is made and is visible to all participants. During the opening, the initial exchange price of the day (opening price) for each security traded on SCOACH is established in accordance with the largest best execution principle. During continuous trading, each entered order or quote is, if possible, executed against the orders and quotes that are already in the order book. No new execution prices may be worse than the limits that still remain on the book. Continuous trading may be interrupted by one or more breaks. In the case of such a break, the Exchange System is reset to pre-opening status. At the end of the break, the Exchange System is transferred to opening status and thereafter into continuous trading. At the close of trading, continuous trading ceases and, depending on the given segment, a closing price is determined for each security.
Scoach Switzerland Ltd Page 18 Following the close of trading, the Exchange System is transferred into post-trading status. During post-trading participants may, depending on the market model, enter and delete orders, quotes or orders and quotes. A theoretical opening price visible to all participants is continuously calculated for each security. SCOACH regulates details of the specific market models in Directives or other forms of publication. 2.20 Subject of off order book trading During Exchange hours, SCOACH shall provide participants with functional features for the execution, settlement and reporting of off order book trades in securities traded on SCOACH (functional features for off order book trading). Participants may only engage in off order book trading of orders in securities which are traded on SCOACH and are payable and deliverable three business days after execution under the following conditions: a. during trading hours, provided that such orders are not below the limits imposed by the duty to trade on the Exchange pursuant to Point 2.8 of these provisions, and b. outside trading hours, with no further restrictions. All other transactions in securities traded on SCOACH are to be executed off order book. 2.21 Trade Confirmation The Trade Confirmation is a functional feature which enables a participant to confirm trades executed off order book with another participant, and thereby report them to SCOACH. This functional feature also enables participants to report post-recorded trades according to procedure. 2.22 Trade Report The Trade Report is a functional feature with which a participant
Scoach Switzerland Ltd Page 19 a. must report to SCOACH all trades executed off order book with a non-participant, b. must report to SCOACH trades executed off order book with a participant if such trades have not been confirmed pursuant to Point 2.21, and c. can enter post-recorded trades according to procedure. 2.23 Delivery and payment Delivery and payment must be made in accordance with the customs and usages of SCOACH. SCOACH shall automatically relay settlement instructions in the name and on behalf of participants to a recognized settlement organization for the following trades in securities eligible for collective safekeeping, which are payable and deliverable three business days after execution: a. all trades executed in on order book trading; b. all trades reported by means of the trade confirmation. SCOACH shall not relay automatic settlement instructions for any other trades. Participants may expressly renounce having automatic settlement instructions generated by SCOACH for trade confirmations. 2.24 Extraordinary situations Extraordinary situations within the meaning of this provision may be, in particular a. large price fluctuations; b. decisions or information which are to be published shortly and which could have a significant influence on the market price (price-sensitive information); or c. other situations likely to hamper fair and orderly trading.
Scoach Switzerland Ltd Page 20 In the event of extraordinary situations, SCOACH may take all the measures which it deems necessary to maintain fair and orderly trading as far as possible. In addition, SCOACH may engage in trading interventions which it considers necessary, in particular by delaying the opening of trading in a security, interrupting or suspending continuous trading in a security, or delisting a security. SCOACH shall inform participants of the measures taken. SCOACH shall set out the details in Directives. 2.25 Emergency situations in general Emergency situations within the meaning of this provision shall be, in particular a. failure of the Exchange System or the SCOACH access infrastructure or parts thereof; b. failure of participants access systems; c. force majeure; or d. other events likely to hamper fair and orderly trading. SCOACH shall endeavour to maintain trading as far as possible in emergency situations. In the event of an emergency situation, SCOACH may take all the measures which it deems necessary to maintain fair and orderly trading as far as possible, or to respond to the situation appropriately. It may, in particular, suspend rules and regulations in whole or in part and temporarily replace them with new stipulations, and also temporarily suspend trading in whole or in part. SCOACH shall inform participants of the measures taken. SCOACH shall set out the details in Directives.
Scoach Switzerland Ltd Page 21 2.26 Failure of the Exchange System In the event of failure of the Exchange System or parts thereof, SCOACH shall take all necessary measures to enable trading to continue on an improvised basis. After remedying the failure, SCOACH shall ensure that normal trading conditions are restored as soon as possible. It shall determine when such normal conditions are to take effect. 2.27 Failure of participants access systems In the event of failure of participants access systems, participants may continue to trade on an improvised basis. Participants are obliged to inform SCOACH immediately of failures in their access systems and the resumption of normal operations after a failure. 2.28 Post-recording procedure Participants are obliged to report their trades to SCOACH as soon as possible after the end of an emergency situation, but at the latest before the start of trading (opening) on the following Exchange day. Such trades are to be transmitted to SCOACH as post-recorded trades. Participants shall notify SCOACH immediately if they are unable to respect the post-recording deadline. SCOACH shall determine when the post-recording procedure shall commence and the post-recorded trades shall be processed. It shall also determine when the postrecording procedure may no longer be utilized. 2.29 Deletion of orders and quotes by SCOACH In emergency situations, each participant may request SCOACH to delete all its orders and/or quotes. SCOACH shall confirm receipt of this request as soon as possible by telefax or electronically. SCOACH shall carry out the deletion as soon as possible. It shall process such requests in the order in which they are received.
Scoach Switzerland Ltd Page 22 2.30 Settlement in cases of failure of the Exchange System or parts thereof or participants access systems In special cases (e.g. in emergency situations of a lasting nature), SCOACH may require participants to issue settlement instructions directly to an SIX Swiss Exchange-recognized securities settlement organization. 2.31 Principle of reporting In principle, participants are legally obliged to report all on order book and off order book trades that they execute in Swiss and foreign securities which are admitted to trading on a Swiss stock exchange. SCOACH shall set out the details in Directives. 2.32 Reporting of on order book trades All on order book trades are automatically recorded in the Exchange System and no longer must be reported separately. 2.33 Reporting deadline for off order book trades In principle, off order book securities trades that are generated during trading hours and not automatically recorded in the Exchange System must be reported within thirty minutes of their execution. Off order book trades that are generated after close of trading or can only be reported outside trading hours must be reported before start of trading on the next trading day at the latest. 2.34 Sensitive block transactions Sensitive block transactions may be published after a delay, provided the participant informs SCOACH within thirty minutes of execution of a transaction that such a transaction has taken place. SCOACH shall set out the details in Directives. 2.35 Principle of utilization, dissemination and publication of data SCOACH shall release price information, turnover figures and other data, provided that these serve to appropriately inform the public and participants. Subject to the provisions governing sanctioning, the identity of participants shall not be revealed without their prior consent.
Scoach Switzerland Ltd Page 23 Utilization of market information relayed via the Exchange System shall be free of charge for registered traders of participants. SCOACH may charge participants and third parties a fee for the dissemination of market information. SCOACH shall set out the details in Directives. 2.36 Information for participants and the public SCOACH shall make the following data available (market information): a. all prices paid on the exchange with an indication of the volume and the time of execution; b. best bid and asked prices with accumulated quantities, i.e. with the quantity offered for each best bid or asked price; c. accumulated volume of on order book trades for the day; d. all reported off order book trades by participants with the corresponding price, volume, time and their accumulated volume for the day; e. the Exchange period (order book status) as well as any trading interventions by SCOACH such as nonopening, interruption, suspension of trading, etc. SCOACH may release market information directly or through data vendors. 2.37 Market supervision In order to monitor compliance with the laws, rules and regulations applicable to trading on SCOACH, SCOACH may request the necessary information and supporting documents from participants at any time, subject to bank secrecy. Furthermore, SCOACH may at any time require a participant s internal and/or external auditors to examine some or all of the business activities of the participant in order to verify compliance with the stipulations of SCOACH. If necessary, the internal and/or external
Scoach Switzerland Ltd Page 24 auditors shall issue a summary report to SCOACH with due observance of bank secrecy. SCOACH shall take the measures it deems appropriate to restore compliance with the relevant laws and/or rules and regulations. Costs incurred in this respect shall be borne fully by the participant. 2.38 Provisions governing market making For trading in certain securities, SCOACH may prescribe that market making be ensured by one or more participants. Depending on the specific segment or, as it were, the securities involved, individual provisions governing market-making activities may be enacted. Only those participants who have obligated themselves in writing to make a market in a given securities issue (as a market maker) are subject to such market-making provisions. A market maker is authorized to post quotes on the Exchange System. Market makers are obligated to maintain a fair and orderly market in the given securities issues. A market maker must ensure that it posts quotes during trading hours and is also otherwise reachable. In the interest of maintaining an orderly market, SCOACH may adopt further requirements for the performance of a market maker function. In particular, it may stipulate a maximum or minimum spread between bid and ask prices, a minimum order size on both sides of the market, as well as the time frame during which quotes must be posted. SCOACH may revoke a market maker s authorization if the market maker fails to perform its obligations. In all other respects, the sanctioning measures pursuant to Point 1.20 apply. SCOACH can set out the details in Directives or other publications. 2.39 Stamp duty SCOACH shall discharge the tax liability of participants domiciled abroad, pursuant to the provisions of the Swiss Stamp Duty Act.
Scoach Switzerland Ltd Page 25 a. SCOACH shall charge participants domiciled abroad stamp duty on transactions effected abroad in Swiss securities by said participants for clients and securities dealers. b. The definitions contained in the Swiss Stamp Duty Act and the relevant provisions of securities exchange legislation concerning reporting requirements shall apply. c. SCOACH shall remit the stamp duty payable by participants domiciled abroad to the Federal Tax Administration. d. Details can be set out in Directives or other publications.
Scoach Switzerland Ltd Page 26 3. PROVISIONS GOVERNING CUSTOMS AND USAGES These provisions describe the standard contract between participants. Except as otherwise agreed in writing, the customs and usages shall basically be considered as the presumed intentions of the parties. Their purpose is to ensure the smooth settlement of securities transactions on SCOACH. 3.1 Purpose The customs and usages describe the standard contract between participants. Except as otherwise agreed in writing, the customs and usages shall basically be considered as the presumed intentions of the parties. Their purpose is to ensure the smooth settlement of securities transactions on SCOACH. Transactions in securities traded on SCOACH shall take place in accordance with the provisions set out below. Subject to the provisions governing on order book transaction types, different agreements between two counterparties shall be permitted. 3.2 Legal effect of purchase The rights and obligations associated with the securities sold shall be considered as having passed to the buyer upon conclusion of the contract. Should changes be made to such rights and obligations, SCOACH may, if necessary for the smooth settlement of transactions, fix a date from which the trades shall be considered as concluded. Trades executed on days designated in the Exchange System as coupon due dates shall be "ex coupon" (i.e. ex interest). If income payments become due between the day of the trade and the time at which delivery of the securities should customarily take place, the buyer is entitled to them. The seller shall pass on such payments to the buyer by crediting the latter with the remuneration or by transferring the coupons. This paragraph shall not apply in the change of ownership of bonds.
Scoach Switzerland Ltd Page 27 3.3 Transfer and payment of securities For transactions executed on SCOACH, the seller shall bear the risk attached to the object sold until transfer to the buyer. The irrevocable deposit of the securities at a settlement organization recognized by SCOACH or the physical delivery of such securities shall be considered as a transfer within the meaning of these provisions. The seller shall be liable for all damage incurred by the buyer as a result of transfers which do not conform to accepted practice. The transfer of the securities must be made in standard, tradable pieces or units. Securities eligible for collective safekeeping must be transferred through an settlement organization recognized by SCOACH. The buyer is not obliged to accept partial transfers of securities. Payment for securities must be made in the agreed currency. 3.4 Notice of defects and right to an exchange The buyer shall immediately examine the securities received. Should there be defects with regard to their condition, the buyer must notify the seller no later than two business days after receipt. For all other defects, the time limit for notification shall be 30 days from the date of delivery. If, however, these defects are not visible upon the usual examination, they may be notified afterwards. This must be done at the latest 14 days after their discovery, and in any case within one year of the delivery of the securities (Art. 210 CO). The special provisions on drawn securities and invalidated or blocked securities remain reserved. The buyer who gives timely notice of defects is entitled to claim an exchange against other tradable pieces, but not rescission of the sale or reduction of the purchase price.
Scoach Switzerland Ltd Page 28 3.5 Deprivation of property by a third party The buyer shall remain safeguarded with respect to the ten-year statute of limitation stipulated under Art. 127 CO on claims to a warranty for deprivation of rights sold as per Art. 192 et seq. CO. 3.6 Trading in warrants 3.7 Non-performing bonds Warrants shall be traded singly. Non-performing bonds are bonds for which interest or redemption payments have been made only partially or not at all, or for which interest or redemption payments have not been transferred in the currency specified in the contract. Bonds which are either completely in default or on whose coupons only a partial payment has been made shall be traded without calculation of accrued interest (flat); the coupons specified in the Exchange System are to be delivered with the bonds. These securities shall be specially designated as such in the Exchange System. Bonds on which interest is not paid as stipulated in the prospectus due to foreign exchange restrictions, a moratorium on payment transfers or other circumstances, but for which there exists a possibility of realizing the coupon falling due, shall be traded without accrued interest. The coupon shall be detached on the expiry date so that the bonds may be traded "ex coupon" from this day on. The securities shall be specially designated in the Exchange System as bonds without accrued interest but with a current coupon. SCOACH reserves the right to take measures departing from this usage in special cases. 3.8 Drawable and drawn bonds The day on which the drawn securities are first published in a journal for statutory stock market notices (publication day) shall be the day on which the due date ("ex date") is fixed. Only undrawn securities may be delivered in respect of trades concluded on the third Exchange day preceding the publication day or later. The publication day shall be notified to participants and announced in the Exchange System at the latest four Exchange days in advance.
Scoach Switzerland Ltd Page 29 In the event that a party triggers its settlement instructions late, or delivery at a recognized settlement organization is delayed due to the seller's insufficient securities holdings, the aggrieved party may demand a cash indemnity at the latest 30 days after delivery. Should delivery not take place at a recognized settlement organization, the seller shall inform the buyer of the numbers on the securities no later than the day before the publication day. In the event that these numbers are not reported, or numbers other than the ones reported are delivered, the seller may, within 30 days of receipt, demand an exchange of the drawn securities for undrawn securities or an appropriate cash indemnity. Said exchange must be effected within ten days. The aforementioned cash indemnity shall be calculated on the basis of the difference between the contract price and the redemption price weighted with the drawing ratio of the recognized settlement organization. The aggrieved party shall be compensated for any loss of interest. The minimum compensation shall be CHF 100. 3.9 Conversion rate for foreign currency bonds The official currency exchange rates shall be applied to foreign currency bonds, regardless of whether payment of principal and interest is made at the daily rate or at an exchange rate printed on the securities and mentioned in the prospectus. The official exchange rates shall be determined by SCOACH and notified to participants. This regulation shall not apply to international bonds. 3.10 Invalidated or blocked securities Securities subject to a stop payment or confiscation order served by a court of law or by the police and published in the Swiss Official Gazette or the official gazettes of the cantons of Zurich, Basle and Geneva at the time of their delivery, or which had already been blocked at such time by the authorities, the Swiss Bankers Association or by means of any other announcement which the seller could reasonably be expected to notice (e.g. report of a stop order on the securities by Telekurs) shall, at the request of the buyer, be exchanged for tradable securities. This request must be made within the 30-day period required for the notice of defects.