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Important information for One Account

General Risk Disclosure Statement and Disclaimer

I/We acknowledge and agree that:

(a) the Bank has advised me/us to read this General Risk Disclosure Statement and Disclaimer carefully. This General Risk Disclosure Statement and Disclaimer forms an integral part of these Terms and Conditions;

(b) the Bank has explained this General Risk Disclosure Statement and Disclaimer to me/us and I/we have read and fully understand the same;

(c) the Bank has recommended me/us to obtain independent legal advice before entering into these Terms and Conditions with the Bank;

(d) this General Risk Disclosure Statement and Disclaimer does not purport to disclose or discuss all of the general risks and other significant aspects of any transaction.  I/We should therefore consult my/our own independent legal, tax and financial advisers prior to entering into any particular transaction.  It is important for me/us to determine whether any transaction is suitable to me/us and I/we should be aware that this is my/our responsibility; and 

(e) additional risk factors in relation to Investments may be set out in the relevant Offering Documents. I/We should carefully read, understand and consider the risk factors in the Offering Documents before making any investment in the Investments.

Unless otherwise defined, capitalized terms used in this General Risk Disclosure Statement and Disclaimer shall have the same meanings given to them in other Parts.

Section A: Risk Disclosure Statements relating to the Services provided under One Account

1. General Risks

1.1 Investment involves risks. Past performance of investment products are no guide to future performance. The value of investments and the income from them can fluctuate and is not guaranteed. I/we may not get back the amount invest and the worst case will result in loss of the my/our entire investments. Leveraged products may involve the potential to lose more than the entire amount of the my/our investment.

1.2 Investments are not appropriate for me/us unless the I am/we are willing or able to accept the risk of adverse movements in the value of investment products and currency exchange rates.

1.3 Prior to entering into any Transaction, I/we should familiarize myself/ourselves with all relevant materials including any Offering Document that has been provided to me/us by the Bank which set out material terms, associated obligations, underlying assumptions, pricing basis, product specific risk factors and other relevant information regarding Transactions which the Customer proposes to enter into.

1.4 I/We should carefully study and understand the risks involved and consider whether entering into a Transaction is suitable in the light of my/our financial position, experience and investments objectives.

1.5 I/We should ensure that I/we fully understands the terms of the investments and any risks involved, and I/we accept any and all risks in connection therewith. I/We have been fully advised to make independent assessment of the risks associated with the entering into of Transactions and the Customer shall seek independent appraisal and/or advice if I am/we are uncertain of or have not understood the product features of any of the investments, any aspect of these risk disclosure statements or the nature of risks involved in making investments, and notwithstanding any materials or information which may be provided by the Bank to the Customer in relation to any investment product, I/we shall consider whether it is a suitable investment.

2. Risk of Investment

The prices of any investment may fluctuate, sometimes dramatically. The price of an investment may move up or down, and may become valueless as it is likely that losses will be incurred rather than profit made as a result of buying and selling investment product.

3. Risk of Online Trading

Transactions over the Internet may be subject to interruption, transmission blackout, delayed transmission due to Internet traffic or incorrect data transmission due to the public nature of the Internet. There may also be a time lag in transmission of information, instruction and communication via the Internet. This may subject instructions to non-execution, delays or error in execution or execution at prices different from those indicated on the Internet.

4. Risk of Client Assets Received or Held Outside Hong Kong

Client assets received or held by the Bank outside Hong Kong are subject to the applicable laws and regulations of the relevant overseas jurisdiction which may be different from those in Hong Kong (including the Securities and Futures Ordinance and the rules made thereunder). Consequently, such client assets may not enjoy the same protection as that conferred on client assets received or held in Hong Kong.

5. Currency Risk

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

6. Risk of Providing an Authority to Direct Mails to Third Parties

If I/we provide the Bank with an authority to direct mail to third parties, it is important for me/us to promptly collect in person all contract notes and statements of my/our account and review them in detail to ensure that any anomalies or mistakes can be detected in a timely fashion.

7. Liquidity and Marketability Risks

I/We acknowledge and agrees that at certain times or under certain market conditions, I/we may find it difficult or impossible to liquidate a position, to assess value or to determine a fair price. Certain equity or debt Securities and money market instruments and, in particular, structured notes or customized products may not be readily realizable or marketable. There can be no certainty that market traders will be prepared to deal in them, and I/we should be aware that proper information for determining my/our current value may not be available.

8. Counterparty Issuer and Credit Risk

8.1 I/We should ensure that it is aware of the identity of, and finds acceptable, the contractual counterparty with whom I/we may be matched. As I/we will often be purchasing an unsecured obligation of the counterparty (as opposed to an obligation of a central clearing corporation in the case with exchange traded futures and options), I/we should evaluate the comparative credit risk.

8.2 Where I/we purchases a debt instrument, such as a note or a bond, I/we takes the credit risk of both its contractual counterparty as well as the issuer of the debt instrument. I/We should be aware that, depending on the product, the capital protection component of a product can be well under 100% of the capital invested and that capital protection does not mean 100% repayment of the purchase price of every product. Where the redemption price of a product is indicated at 100% (100% capital protection), it should be noted that this represents no guarantee by the issuer or the Bank that 100% of the purchase price of the product will be paid out at maturity. Capital protection only protects me/us from the downside-risk of the Transaction itself but not from the credit risk of the counterparty and the issuer.

8.3 If the Bank deals with me/us as counterparty, the Bank will deal with me/us at arms-length. At no time will the Bank be acting as a fiduciary of me/us nor will the Bank accept any fiduciary obligation to me/us. As a counterparty of the Bank, any loss to me/us may be a gain to the Bank.

9. Deposited Property and Cash

I/We should also be familiar or familiarize myself/ourselves with the protections accorded to money or other property that I/we deposit for domestic and foreign Transactions, particularly in the event of an insolvency or bankruptcy of the issuer, guarantor (if applicable), custodian or intermediary. The extent to which I/we may recover my/our money or property may be governed by local rules and regulations. In some jurisdictions, property which had been specifically identifiable as my/our own will be pro-rated in the same manner as cash for purposes of distribution in the event of a shortfall.

10. Transaction Costs

Before making any Transaction or investments, I/we should obtain a clear explanation of all commissions, fees and other charges for which I/we will be liable. My/our net returns from any Transaction or investments would also be affected by the Transaction costs (i.e. commission, fees and other charges) charged by the Bank or third parties and any relevant tax liabilities. These costs must be considered in any risk assessment made by me/us. In some cases, managed Accounts may be subject to substantial charges for management and advisory fees. It may be necessary for those Accounts that are subject to these charges to make substantial trading profits to avoid depletion or exhaustion of their assets.

11. Liquidity Risk / Early Withdrawal Risk / Cancellation Risk

Any cancellation or withdrawal prior to maturity is subject to the consent of the Bank and/ or a relevant third party (as may be applicable). With these risks, investors may incur significant costs or losses.

12. Early Redemption or Termination Risk

I/We should be aware that it may be a general condition of the investment products that the issuer may, at its discretion, redeem or terminate the investments prior to maturity upon notice to investors under a variety of conditions and/ or circumstances set forth in the issuer’s Offering Document, and such redemption may be less or substantially less than its investment amount.

13. Tax risks

Before entering into any Transaction, I/we should understand the tax implications (including the implications of any applicable income tax, goods and services or valued added taxes, stamp duties and other taxes) of acquiring, entering into, holding and disposing of the relevant investments or Transaction. Different Transactions may have different tax implications. The tax implications of any Transaction are dependent upon the nature of my/our business activities and the Transaction in question. I/We should, therefore, consult my/our independent tax adviser to understand the relevant tax considerations.

Section B: Risk Disclosure Statements relating to Securities Trading

1. Risk of Trading Growth Enterprise Market Stocks

Growth Enterprise Market (GEM) stocks involve a high investment risk. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. GEM stocks may be very volatile and illiquid.

The decision to invest should be made only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Current information on GEM stocks may only be found on the internet website operated by The Stock Exchange of Hong Kong Limited. GEM companies are usually not required to issue paid announcements in gazetted newspapers.

I/We should seek independent professional advice if I am/we are uncertain of or have not understood any aspect of this risk disclosure statement or the nature and risks involved in trading of GEM stocks.

2. Risk of Trading Nasdaq-Amex Securities at the Stock Exchange of Hong Kong Limited

The securities under the Nasdaq-Amex Pilot Program (PP) are aimed at sophisticated investors. I/We should consult the Bank and become familiarized with the PP before trading in the PP securities. I/We should be aware that the PP securities are not regulated as a primary or secondary listing on the Main Board or the Growth Enterprise Market of The Stock Exchange of Hong Kong Limited.

Section C: Risk Disclosure Statements relating to Foreign Securities Trading

1. Foreign Securities may carry additional risk not generally associated with Securities in the domestic market. I/We may not be afforded equivalent protection in respect of Foreign Securities as that afforded under Hong Kong law and I/we may not have the same rights as I/we have in respect of Securities held in Hong Kong. The value or income of foreign Securities may be more volatile and could be adverse affected by changes in currency rates of exchange, foreign taxation practices, foreign laws, government practices, regulations and political events. I/We should only undertake trading of Foreign Securities if I/we understand the nature Foreign Securities trading and the extent of my/our exposure to risks. I/We should carefully consider whether such trading is appropriate for me/us in light of my/our experience, risk profile and other relevant circumstances and seek independent advice.

2. I/We may find it difficult to liquidate investments in Foreign Securities where they have limited liquidity in the relevant market.  Foreign laws, government practices and regulations may also affect the transferability of Foreign Securities or may differ from or offer less investor protection than domestic market. Timely and reliable information about the value or the extent of the risks of Foreign Securities may not be readily available at all times.

Section D: Risk Disclosure Statements relating to Bonds Trading

1. There may be risks in leaving Bonds in the Bank’s safekeeping.

2. The Bonds may not be capital protected by the issuer (depends on the selected tranches and reference should be made to the corresponding prospectus for details) and there may be circumstances that the money and/or value of shares that receiving at maturity may be substantially less than the value of my/our original investment. If there is any fractional share(s), it/they may not be physically delivered.

3. In situations where any Bond is a product combining note with financial derivatives, such as options, I/we understand that its return may he linked to the performance of other financial instruments, e.g. underlying stocks / companies / indices, etc. Unless such Bond is listed on The Stock Exchange of Hong Kong Limited, I/we have to sell such Bond on the over-the-counter market. The prices of such Bond in secondary markets are affected by a wide range of factors, including the performance of the underlying stocks / companies / indices, the market view of the credit quality of the reference company, interest rates, etc. I/We understand that secondary markets do not always exist and accept any associated liquidity risk. Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of option (i.e. put or call) which they contemplate trading and the associated risks.

Section E: Risk Disclosure Statements relating to investments in Asset Linked Investment Products

1. I/We understand and accept that the asset linked investments may not be capital protected by the issuer and there are circumstances that the value of underlying asset(s) that I/we receive at maturity may be substantially less than the value of my/our original investment. If there is any fractional unit(s), it/they may not be physically delivered.

2. I/We understand that asset linked investments are generally products combining notes with financial derivatives, such as options. Their returns are linked to the performance of other financial instruments, e.g. underlying stocks/companies/indices, etc. Unless the asset linked investments are listed on The Stock Exchange of Hong Kong Limited, I/we have to sell my/our asset linked investments on the over-the-counter market. The prices of asset linked investments in secondary markets are affected by a wide range of factors, including the performance of the underlying stocks /companies /indices. I/We understand that secondary markets do not always exist and accept any associated liquidity risk. Transactions in options carry a high degree of risk. Purchasers and sellers of options should familiarize themselves with the type of option (i.e. put or call) which they contemplate trading and the associated risks.

3. The liquidity of Asset-Linked Investment Products is not guaranteed as there is no liquid trading market and selling back Asset-Linked Investment Products may not necessarily avoid losses. Past performance of an Asset-Linked Investment Product and/ or the relevant Underlying Asset(s) may not be indicative of their respective future performance. I/We should refer to the Offering Documents (including the risk factors stated therein) and the relevant risk disclosure statement before making any investments decision. Investors who purchase Asset-Linked Investment Products are relying upon the creditworthiness of the Asset-Linked Investment Product issuer and/ or guarantor (if applicable).

4. The trading price of Asset-Linked Investment Products (where tradable at all) may fluctuate depending on factors such as market interest rate movements, foreign exchange rates, the price of the Underlying Assets which are linked to the products, and the market for similar Underlying Assets. Also, the price could be affected if there are only very few potential buyers in the market. With Asset-Linked Investment Products, if the issuer has to redeem the products unexpectedly, I/we could lose part, and possibly all, of my/our investments. The amount that the issuer will be able to pay back on the products may be less, and could be substantially less, than the principal amount of the Asset-Linked Investment Products. It is conceivable that I/we could lose all of my/our investments.

5. A structured or over-the-counter transaction generally cannot be assigned or transferred without the consent of the other party. The Bank is not obliged to repurchase a transaction from me/us or terminate a Transaction at my/our request. Since Transactions are customized and not fungible, engaging in a transaction with another dealer to offset a transaction I/we have entered into with the Bank will not automatically close out those positions (unlike the case of equivalent exchange-traded futures and options) and will not necessarily function as a perfect hedge. Off-exchange Transactions may also be less regulated or subject to a separate regulatory regime. Before undertaking such Transactions, I/we should be familiar or familiarize myself/ourselves with the applicable rules and attendant risks.

6. If I/we try to sell his/her products before maturity, I/we may receive an offer which is less than the amount invested in or I/we may not be able to sell my/our products.

Section F: Risk Disclosure Statements relating to Currency-linked Deposits

1. The high yield of Currency-Linked Deposit is effectively the sum of the interest received from the time deposit and the premium from writing a currency option with inherent risks.

2. Currency-Linked Deposit is not a traditional time deposit or its substitute and provides no guarantee of return or yield on investment.  The net return in relation to Currency-Linked Deposit will depend on market conditions prevailing at the Fixing Time on the Fixing Date.

3. The Linked Currency received may be subject to currency devaluation risk. The loss due to currency devaluation may offset the interest earned on the Currency-Linked Deposit and may even result in significant losses in the principal amount of the deposit.  There is a risk that losses may be incurred rather than profit made as a result of establishing any Currency-Linked Deposit.

4. The return on a Currency-Linked Deposit is limited to the interest payment thereon.  This is the case even if my/our view of the exchange rate movement of the currencies concerned is correct.

5. I/We have no right or ability to designate an early deposit maturity date in respect of any Currency-Linked Deposit.

Section G: Risk Disclosure Statements and Other Information relating to China Connect

This Section describes some of the key risk factors and other information concerning China Connect. This Section does not disclose all the risks and other significant aspects of Northbound trading through China Connect. I/we acknowledge that I/we understand the nature and risks of China Connect and Northbound trading and I/we should consider carefully (and consult my/our own advisers where necessary) whether trading in China Connect Securities is suitable for me/us in light of my/our circumstances. The decision to trade in China Connect Securities is mine/ours, but I/we should not trade in China Connect Securities unless I/we fully understand and am/are willing to assume the risks associated with China Connect and am/are able to comply with all relevant China Connect Laws and China Connect Rules. I/We acknowledge the risks and agree to the terms set out in this Section. I am/We are responsible for monitoring changes in the China Connect Laws and China Connect Rules and complying with any new requirements.

The Bank does not represent that the information set out in this Section is up to date, and does not undertake to update the information set out in this Section. In addition, the Bank does not provide any warranty with respect to such information and no such information is to be construed as legal, financial or tax advice of any kind by it.

Home Market Rules

1 Home Market Rules

A fundamental principle of China Connect is that the laws and rules of the home market of the applicable securities shall apply to investors in such securities. In respect of China Connect Securities, Mainland China is the home market and thus the general principle is that investors in China Connect Securities should observe the relevant China Connect Rules and other Mainland China securities laws and regulations. If such rules and regulations are breached, the relevant China Connect Market has the power to carry out an investigation.

Nevertheless, certain Hong Kong legal and regulatory requirements will also continue to apply to Northbound trading.

Trading and Settlement Restrictions

2 Pre-Trade Checking

SEHK is required to check that in respect of any Northbound sell orders given by an Exchange Participant, the relevant Exchange Participant holds sufficient and available China Connect Securities to be able to fill such Northbound sell orders. Such Pre-Trade Checking will be carried out prior to the start of each Trading Day.

Accordingly, I/we may be unable to execute Northbound sell orders due to Pre-Trade Checking related requirements. My/our attention is drawn to the provisions set out in Clause 7 (Compliance with Pre-Trade Checking Requirements) of the China Connect Terms. I/We note in particular that I/we may be unable to execute a sell order of China Connect Securities if there has been a delay or failure for whatever reason in the transfer of the relevant China Connect Securities to any clearing account of the Bank or if for any other reason the Bank considers that there is or may be non-compliance with any China Connect Laws or China Connect Rules.

Any risk, loss or cost resulting from non-compliance or potential non-compliance with Pre-Trade Checking and/or the relevant China Connect Laws or China Connect Rules shall be borne by me/us.

3 Settlement

Northbound trades will follow the A Share settlement cycle. For settlement of China Connect Securities trades, ChinaClear will debit or credit the securities accounts of its participants (including HKSCC as Clearing Participant) on T day free of payment. The Bank may have settlement arrangements in place different from the ChinaClear settlement arrangements. Unless the Bank agrees to prefund settlement, settlement of funds relating to such trading will be effected on T+1 day. The Bank may, in its absolute discretion, decide to prefund settlement. In the event the Bank agrees to prefund the settlement of China Connect Securities trades, (a) the Bank shall retain the funds received from the HKSCC on T+1 day; and (b) I/we shall reimburse the Bank with respect to any 'excess' pre-funding provided by the Bank.

Although the transfer of the China Connect Securities precedes the transfer of cash, under the China Connect Service, the title to China Connect Securities will not be released until the receipt of confirmation of payment. Accordingly, for the purposes of contract notes, the settlement date would be T+1 day when both the securities and the cash are settled or, where the purchase was pre-funded, the settlement date would be the date on which the securities are released.

I/We acknowledge that there is no guarantee that the Bank will offer prefunding settlement and that if the Bank decides to offer prefunding settlement, the Bank may decide to terminate such service at any time.

4 Quota Restrictions

Purchases of China Connect Securities through China Connect are subject to certain quota controls as described below. As a result, there is no assurance that a buy order can be successfully placed through China Connect.

There is a daily quota that limits the maximum value of all Northbound buy trades in respect of each China Connect Market that can be executed by Exchange Participants on each Trading Day (“Daily Quota”). The Daily Quota may change from time to time without prior notice and investors are advised to refer to the HKEx website and other information published by the HKEx for up-to-date information.

The SEHK and the relevant China Connect Market may also set pricing and other restrictions on buy orders in order to prevent the artificial use or filling of the Daily Quota.

If there is a restriction, rejection or suspension of Northbound buying (which would include any order that has been accepted but not yet executed) as a result of a breach of the Daily Quota or the relevant pricing and other restrictions, the Bank will be unable to carry out any buy orders and any instruction to buy submitted but not yet executed will be restricted or rejected.

Conversely, under the SEHK rules, investors may sell their China Connect Securities regardless of whether there is a breach of the Daily Quota.

5 Restriction on Day Trading

Day (turnaround) trading is not permitted on the China Connect Markets. If I/we buy China Connect Securities on T day, I/we may be able to sell the shares only on or after T+1 day. Due to Pre-Trade Checking related requirements, the Bank may accept an instruction to sell China Connect Securities that were bought on T day only on or after the applicable cut-off time (as notified to me/us by the Bank from time to time) on T+1 day.

6 No off-exchange trading and transfers

I/We, the Bank and any Related Person shall not trade or provide services to facilitate trading of any China Connect Securities otherwise than through the China Connect Market System, and the Bank shall not match, execute or arrange the execution of any sale and purchase instructions or any transfer instructions from me/us or effect any Non-trade Transfer or settlement of instructions in respect of any China Connect Securities in any manner otherwise than through China Connect in accordance with the China Connect Rules, except in the following circumstances or as otherwise provided by a relevant China Connect Authority:

(a) stock borrowing and lending of China Connect Shares which are eligible for covered short selling and with a tenor of no more than one month;

(b) stock borrowing and lending of China Connect Shares which are eligible for satisfying the Pre-Trade Checking requirement, with a tenor of one day (and which is not renewable);

(c) post-trade allocation of China Connect Securities by a fund manager across the funds and/or sub-funds it manages; and

(d) any other situations specified by the China Connect Markets and ChinaClear, including but not limited to any Non-trade Transfer as a result or for the purpose of (a) succession; (b) divorce; (c) dissolution, liquidation or winding up of any company or corporation; (d) donation to a charitable foundation; and (e) assisting in any enforcement action or proceedings of any court, prosecutor or law enforcement agency.

7 Placing Orders

Only limit orders with a specified price are allowed pursuant to China Connect Laws and China Connect Rules, whereby buy orders must not be lower than at the current best price and sell orders may be executed at or higher than the specified price. Market orders will not be accepted.

8 China Connect Market Price Limits

China Connect Securities are subject to a general price limit of a ±10% based on the previous Trading Day’s closing price. In addition, China Connect Securities which are on the risk alert board are subject a ±5% price limit based on the previous trading day’s closing price. The price limit may be changed from time to time. All orders in respect of China Connect Securities must be within the price limit. Any orders with a price beyond the price limit will be rejected by the relevant China Connect Market.

9 Delisting of companies listed on the China Connect Markets

According to the SSE Rules and the SZSE Rules, if any company listed on a China Connect Market (other than a company listed on the ChiNext Board) is in the delisting process, or its operation is unstable due to financial or other reasons such that there is a risk of being delisted or exposing investors’ interests to undue damage, such listed company will be earmarked and traded on the risk alert board. Any change to the risk alert board may occur without prior notice. If a China Connect Security which is eligible for China Connect trading is subsequently moved to the risk alert board, investors under China Connect will be allowed only to sell the relevant China Connect Security and will be prohibited from further buying. For details concerning the risk alert board, please refer to the SSE Rules, SZSE Rules and any other relevant sources from time to time.

10 Account Information of Beneficial Owner

The identity of the beneficial owner of China Connect Securities which are the subject of a sell order may need to be disclosed to HKSCC and/or relevant Mainland China authorities.

11 No Manual Trade or Block Trade

There will be no manual trade facility or block trade facility for Northbound trading under China Connect.

12 Short Selling

Covered short selling of China Connect Shares may become available in due course provided such covered short selling satisfies the requirements specified by the relevant China Connect Authorities, including that short selling orders are only in respect of China Connect Shares designated as eligible for short selling, are appropriately flagged as such and that they are subject to an uptick rule. However naked short selling of China Connect Shares is prohibited. The China Connect Authorities may also suspend the ability to engage in short selling of any China Connect Share if the volume of short selling activity exceeds thresholds prescribed by the relevant China Connect Market. I/We shall be fully responsible for understanding and complying with short selling requirements as in effect from time to time and for any consequences of non-compliance.

13 Amendment of Orders and Loss of Priority

Consistent with the current practice in Mainland China, if an investor engaged in Northbound trading wishes to amend an order, the investor must first cancel the original order and then input a new one. Accordingly, order priority will be lost and, subject to the Daily Quota balance restrictions, the subsequent order may not be filled on the same Trading Day.

14 Special China Connect Securities

SEHK will accept or designate securities which cease to meet the eligibility criteria for China Connect Securities as Special China Connect Securities (provided that they remain listed on the relevant China Connect Market). In addition, any securities or options (which are not “eligible for China Connect trading”) received by me/us as a result of any distribution of rights or entitlements, conversion, takeover, other corporate actions or abnormal trading activities will be accepted or designated by SEHK as Special China Connect Securities. I/We will only be able to sell, but not buy, any Special China Connect Securities.

Mainland China and Hong Kong Legal Issues

15 Disclosure of Interests

Under Mainland China laws, rules and regulations, if I/we hold or control shares (on an aggregate basis, i.e., including both domestically and overseas issued shares of the same Mainland China Listco (as defined below), whether the relevant holdings are through Northbound trading, QFII/RQFII regime or other investment channels) in a Mainland China incorporated company which is listed on a Mainland China stock exchange (a “Mainland China Listco”) above a certain threshold as may be specified from time to time by the relevant China Connect Authorities, I/we must disclose such interest within the period specified by the relevant China Connect Authority, and I/we must not buy or sell any such shares within the period specified by the relevant China Connect Authority. I/We must also disclose any substantial change in my/our holding as required by the relevant China Connect Authority.

Where a Mainland China incorporated company has both H Shares listed on the SEHK and A Shares listed on a China Connect Market, if an investor is interested in more than a certain threshold (as may be specified from time to time) of any class of voting shares (including A Shares purchased through China Connect) in such Mainland China incorporated company, the investor is under a duty of disclosure pursuant to Part XV of the SFO. Part XV of the SFO does not apply where the Mainland China incorporated company has not listed any shares on the SEHK.

It shall be my/our responsibility to comply with any disclosure of interest rules from time to time imposed by the relevant China Connect Authorities and arrange for any relevant filings.

16 Short Swing Profit Rule

Under Mainland China laws, rules and regulations, the “short swing profit rule” requires me/us to give up/return any profits made from purchases and sales in respect of China Connect Shares of a particular Mainland China Listco if (a) my/our shareholding in that Mainland China Listco exceeds the threshold prescribed by the relevant China Connect Authority from time to time and (b) the corresponding sale transaction occurs within the six months after a purchase transaction, or vice versa. I/We (and I/we alone) must comply with the “short swing profit rule”.

17 Foreign Ownership Limits

Under Mainland China laws, rules and regulations, there is a limit to how many shares a single foreign investor is permitted to hold in a single Mainland China Listco, and also a limit to the maximum combined holdings of A Shares of all foreign investors in a single Mainland China Listco. Such foreign ownership limits may be applied on an aggregate basis (i.e. across both domestically and overseas issued shares of the same issuer, whether the relevant holdings are through Northbound trading, QFII/RQFII regime or other investment channels). It shall be my/our responsibility to comply with all foreign ownership limits from time to time imposed by China Connect Laws and China Connect Rules. Such legal and regulatory restrictions or limitations may have an adverse effect on the liquidity and performance of an investment in China Connect Shares due to factors such as limitations on fund repatriation, dealing restrictions, adverse tax treatments, higher commission costs, regulatory reporting requirements and reliance on services of local custodians and service providers. As a result, I/we may suffer losses through my/our trading or investment in China Connect Shares.

If the Bank becomes aware that I/we have breached (or reasonably believes that I/we may breach upon execution of further Northbound buy orders) any foreign ownership limits, or if the Bank is so required by any China Connect Authority, including, without limitation, as a result of any Forced-sale Notice issued by a China Connect Market, the Bank will sell any China Connect Shares pursuant to Clause 9 (Sale, Transfer and Disgorgement) of the China Connect Terms above if I/we fail to comply with the corresponding Client Forced-sale Notice in order to ensure compliance with all China Connect Laws and China Connect Rules. In such case, no buy orders for the relevant China Connect Shares will be accepted until the relevant China Connect Market informs its corresponding SEHK Subsidiary or SEHK that the aggregate foreign shareholding has fallen below a certain percentage. SEHK may determine in its absolute discretion which Exchange Participants and what quantity of China Connect Shares should be subject to a Forced-sale Notice (this is likely to be on a “last-in, first-out” basis), and SEHK’s (or the relevant SEHK Subsidiary’s) own records shall be final and conclusive.

Moreover, under Mainland China laws, where the aggregate holdings of foreign investors exceed a specified percentage (the “Cautionary Level”) of the issued shares of a single Mainland China Listco, upon notification by the relevant China Connect Market to its corresponding SEHK Subsidiary, SEHK and the relevant SEHK Subsidiary are required as soon as practicable thereafter to suspend accepting buy orders in respect of the relevant China Connect Shares. In such circumstances, the Bank may reject my/our buy orders until the aggregate shareholding of foreign investors has fallen below the specified percentage (the “Permitted Level”) as advised by the relevant China Connect Market.

As of the date of the China Connect Terms, the single foreign investor limit is set at 10% of the shares of a Mainland China Listco and the aggregate foreign investor limit of A Share holdings is set at 30% of the shares of a Mainland China Listco (while the Cautionary Level and the Permitted Level are set at 28% and 26% respectively of the shares of a Mainland China Listco). Such limits are subject to change from time to time and the Bank shall not be under any obligation to inform me/us of any such changes to foreign ownership limits.

18 Taxation

Prior to investing in China Connect Securities, I/we understand that I am/we are strongly urged to consult my/our own tax advisers and counsel with respect to the possible Hong Kong and/or Mainland China tax consequences to me/us of such investment since such tax consequences may differ in respect of different investors.

I/We shall be fully responsible for any Taxes in respect of China Connect Securities including, without limitation, any capital gains tax or other Mainland China taxes, and will indemnify the Bank and any Related Person from and against all Hong Kong and/or Mainland China Taxes which the Bank or Related Persons may incur arising in connection with any China Connect Securities which I/we hold, trade or otherwise deal in.

The Bank assumes no responsibility for advising on or handling any tax issues, liabilities and/or obligations in connection with China Connect, nor will the Bank provide any service or assistance in this regard. Please refer to Clause 13 (Fees and Taxation) of the China Connect Terms for details of the applicable legal terms.

19 Insider Dealing, Market Manipulation and Other Market Conduct Rules

Northbound trading through the China Connect will be subject to Mainland China laws and regulations prohibiting activities that constitute market manipulation, insider dealing and related offences. The scope of these restrictions may not be the same as equivalent requirements under Hong Kong law. In particular, defences applicable under Hong Kong market misconduct rules may not be applicable under Mainland China laws and regulations. If I am/we are unfamiliar with Mainland China market conduct requirements and restrictions, I/we should seek specialist advice before engaging in trading through the China Connect. I/We confirm that I am/we are not in possession of inside information when trading China Connect Securities or procuring others to do so.

20 Client Securities Rules

By way of brief background, the Client Securities Rules prescribe how client assets are to be dealt with by all intermediaries and their associated entities. However, as the China Connect Securities traded through China Connect are not listed or traded on the SEHK, the Client Securities Rules will not apply unless otherwise specified by the SFC or any other relevant China Connect Authority.

21 Investor Compensation Fund

Trading in China Connect Securities does not enjoy the protection afforded by the Investor Compensation Fund established under the SFO. Accordingly, when I/we trade in China Connect Securities, unlike the trading of SEHK-listed securities, I/we will not be covered by the Investor Compensation Fund in respect of any loss I/we may sustain by reason of a default by SFC licensed or registered persons.

22 Ownership of China Connect Securities

Hong Kong law recognises the proprietary interest of investors in securities held for them by their broker or custodian in CCASS. Such recognition should apply equally to China Connect Securities held for Hong Kong and overseas investors by the Clearing Participant through HKSCC. In addition, in Mainland China (where China Connect Securities are registered in a securities account opened with ChinaClear in the name of HKSCC), it is expressly stipulated in the CSRC China Connect Rules that HKSCC acts as the nominee holder and the Hong Kong and overseas investors are the beneficial owners of the China Connect Securities.

I/We shall conduct my/our own review of the materials published by HKEx on China Connect in relation to the ownership of China Connect Securities and the applicable China Connect Rules as they may be amended and supplemented from time to time. I/We shall also consult my/our own legal advisers to make my/our own assessment of my/our rights as a Northbound investor in China Connect Securities.

Under the rules of CCASS, HKSCC is prepared to provide assistance to the beneficial owners of China Connect Shares where necessary. HKEx notes that any beneficial owner who decides to take legal action is responsible for seeking its own independent legal advice to satisfy itself and HKSCC that a cause of action exists and the beneficial owner should be prepared to conduct the action and take up all costs in relation to the action, including providing HKSCC with indemnities and legal representation in proceedings. Further details are set out in the HKEx published materials.

Clearinghouse Risk

23 Risk of ChinaClear Default

ChinaClear has established a risk management framework and measures that are approved and supervised by the CSRC. If ChinaClear (as the host central counterparty) defaults, HKSCC has stated that it may (but shall have no obligation to) take any legal action or court proceeding to seek recovery of the outstanding China Connect Securities and monies from ChinaClear through available legal channels and through ChinaClear’s liquidation process, if applicable. As ChinaClear does not contribute to the HKSCC guarantee fund, HKSCC will not use the HKSCC guarantee fund to cover any residual loss as a result of closing out any of ChinaClear’s positions. HKSCC will in turn distribute the China Connect Securities and/or monies recovered to Clearing Participants on a pro-rata basis as prescribed by the relevant China Connect Authorities. The Bank in turn will be distributing China Connect Securities and/or monies to the extent recovered directly or indirectly from HKSCC. Although the likelihood of a default by ChinaClear is considered to be remote, investors should be aware of this arrangement and of this potential exposure before engaging in Northbound trading.

24 Risk of HKSCC Default

The Bank’s provision of services pursuant to the China Connect Terms also depends upon the performance by HKSCC of its obligations. Any action or inaction of the HKSCC or a failure or delay by the HKSCC in the performance of its obligations may result in a failure of settlement of China Connect Securities and/or monies in connection with them and I/we may suffer losses as a result. Neither the Bank nor any Related Person shall have any responsibility or liability for any such losses.

Other Operational Issues

25 Scripless Securities

China Connect Securities are traded in scripless form and accordingly, China Connect Securities may not be physically deposited into and/or withdrawn from CCASS.

26 Company Announcements on Corporate Actions

Any corporate action in respect of China Connect Securities will be announced by the relevant issuer through the SSE website and/or SZSE website (as the case may be) and certain appointed newspapers. HKSCC will also record all corporate actions relating to China Connect Securities in CCASS and inform its Clearing Participants of the details via the CCASS terminals as soon as practicable on the announcement date. Investors engaged in Northbound trading may refer to the SSE website and/or the SZSE website (as the case may be) and the officially appointed newspapers and website (such as Shanghai Securities News (上海證券報), Securities Times (證券時報), China Securities Journal (中國證券報), Securities Daily (證券日報) and www.cninfo.com.cn (巨潮資訊網 ) or, alternatively, the HKEx website’s China Stock Markets Web (or such other replacement or successor web page from time to time) for corporate actions in respect of China Connect Securities issued on the previous Trading Day. I/We understand that I/we should note that (i) issuers that are listed on the China Connect Markets publish corporate documents in simplified Chinese only, and English translations will not be available and (ii) issuers listed on the ChiNext Board are required to publish certain corporate announcements on their corporate websites and the officially appointed websites only.

In addition, HKSCC will endeavour to collect and distribute cash dividends relating to China Connect Securities to Clearing Participants in a timely manner. Upon receipt of the dividend amount, HKSCC will to the extent practicable arrange to distribute to relevant Clearing Participants on the same day.

Unlike the current practice in Hong Kong in respect of SEHK-listed shares, investors engaged in Northbound trading may not be able to attend shareholder meetings by proxy or in person.

The Bank does not and cannot ensure the accuracy, reliability or timeliness of any company announcements of corporate actions and neither the Bank nor any Related Person accepts any liability (whether in tort or contract or otherwise) for any loss or damage arising from any errors, inaccuracies, delays or omissions or any actions taken in reliance thereon. The Bank expressly disclaims all warranties, expressed or implied, as to the accuracy of any company announcement or as to the fitness of the information for any purpose.

27 Average Pricing across Funds for Fund Managers*  

If I/we act as a fund manager for more than one fund or an asset manager on behalf of more than one client and I/we pre-allocate China Connect orders across such funds or clients which I/we manage, the Bank may offer Average Pricing for such orders notwithstanding such orders may be executed at different times during the same Trading Day. Where Average Pricing applies, each fund or client will be allocated China Connect Securities (or their proceeds) at the same averaged price, which may be higher or lower than the price which such fund or client would have paid or received had the orders been processed individually and in the order submitted directly or indirectly to the Bank. Neither the Bank nor any Related Person will be responsible for any such differences in pricing or any loss or risk arising from the application of Average Pricing.

* Note: Applicable only to fund managers electing for pre-trade allocation.

28 Disclosure of Information and Publication of Trade Information

SEHK may require the Bank to provide information on my/our profile, and the type and value of my/our orders in relation to Northbound trading of China Connect Securities and the trades which the Bank executed for me/us at such intervals and in such form as SEHK may specify from time to time for purposes of the publication, dissemination or public distribution of aggregated information in respect of China Connect Securities trades under China Connect, trading volumes, investor profiles and other related data. SEHK may forward such information to the relevant China Connect Market for surveillance and investigation purposes.

29 Client Error

Neither the Bank nor any Related Person shall be liable for any loss, damage or expense or consequential loss, damage or expense suffered by an investor as a result of any trading based on the investor’s instructions. The Bank will not be able to unwind any trade, and investors should also take note of the settlement arrangements in respect of China Connect Securities under China Connect, including but not limited to quota restrictions.

The China Connect Rules generally prohibit any off-exchange trading or transfers. However transfers may be permitted between the Bank and me/us to rectify a trade in limited circumstances, although there is a lack of clarity as to the circumstances in which such transfers may be permitted. The Bank shall have absolute discretion to determine whether to conduct any transfer to rectify any error trade and shall have no obligation to do so. Neither the Bank nor any Related Person shall have any liability for any losses which may result directly or indirectly from such errors or any refusal to conduct a transfer to correct an error trade.

30 Retention of Information

I/We acknowledge and accept that the Bank will be required under the China Connect Rules to keep records for a period of not less than 20 years of (a) all orders and trades executed on my/our behalf; (b) any instructions received from me/us; (c) my/our account information in relation to Northbound trading; and (d) all relevant information concerning margin trading and stock borrowing and lending of any China Connect Shares (including, without limitation, in respect of any such margin trading, the relevant securities margin trading arrangement and the funds provided).

31 China Connect Market System

SEHK or the relevant SEHK Subsidiary (after consulting with SEHK) may, under certain circumstances as specified in the SEHK rules and/or whenever the SEHK determines that it is appropriate and in the interest of a fair and orderly market to protect investors, temporarily suspend or restrict all or part of the order-routing and related supporting services with regard to all or any Northbound trading of China Connect Securities, and for such duration and frequency as SEHK may consider appropriate. I/We will not be able to buy or sell China Connect Securities on SEHK through China Connect during any period in which trading of China Connect Securities is suspended. In particular, I/we should note that while trading of China Connect Securities is suspended by the SEHK, trading of such China Connect Securities may continue on the relevant China Connect Market. I/We may remain exposed to fluctuations in the price of China Connect Securities caused by trading on the relevant China Connect Market during the period when trading of such China Connect Securities is suspended by SEHK.

SEHK has absolute discretion to change the operational hours and arrangements of the China Connect Service at any time and without advance notice, whether on a temporary basis, due to operational needs, inclement weather, under emergency situations or otherwise. Moreover, SEHK or the relevant SEHK Subsidiary (with the agreement of SEHK) may cease the provision of the China Connect Northbound trading service permanently.

Such suspension, restriction or cessation will affect the Bank’s ability to accept and process my/our orders and I am/we are advised to refer to the HKEx website and other information published by the HKEx for up-to-date information. There can be no assurance that my/our orders will be accepted or processed, notwithstanding that China Connect Securities may be traded through other channels including, without limitation, by Mainland China investors on the relevant China Connect Market.

Further, the SEHK rules state that where any H Shares with corresponding A Shares eligible as China Connect Securities are suspended from trading on SEHK, but the corresponding A Shares are not suspended from trading on the relevant China Connect Market, the service for routing the China Connect sell orders and China Connect buy orders for such A Shares to the relevant China Connect Market for execution will normally remain available. However, SEHK may, in its discretion, restrict or suspend such service without prior notice and my/our ability to place sell orders and buy orders may be affected.

The China Connect Market System is a platform for trading of China Connect Securities under China Connect. The Bank provides trading services based on the China Connect Market System which is operated by the relevant China Connect Market. The Bank is not responsible for any delay or failure caused by any China Connect Market System and investors accept all risks arising from trading China Connect Securities through any China Connect Market System. Neither the Bank nor any Related Person shall be responsible or held liable for any loss or damage directly or indirectly suffered by me/us arising from or in connection with the China Connect Service or the CSC through Northbound trading including, without limitation, the following:

(a) a suspension, restriction or cessation of the China Connect Service or the CSC, or any inability to access or use the CSC or the China Connect Service;

(b) any special arrangement put in place or any action, step or measure taken or not taken to deal with an emergency or contingencies, including but not limited to the cancellation of any or all China Connect orders input by Exchange Participants;

(c) any suspension, delay, interruption or cessation of trading of any China Connect Securities on the relevant China Connect Market;

(d) any delay, suspension, interruption or order cancellation of any China Connect Securities as a result of the hoisting of a Typhoon Signal No. 8 or above or the issuance of the Black Rainstorm Warning in Hong Kong;

(e) any delay or failure to route any China Connect orders or any delay or failure to send any order cancellation requests or to provide the China Connect Service due to any system, communication or connection failure, power outage, software or hardware malfunction or other events beyond the Bank’s or a Related Person’s control or the control of SEHK;

(f) any circumstance in which a China Connect order which the Bank has requested to be cancelled not being cancelled for any reason whatsoever;

(g) in the circumstance that SEHK or the relevant China Connect Market requires that the Bank rejects any order for China Connect Service;

(h) any delay, failure or error of any China Connect Market System or any system upon which the Bank or a Related Person, the relevant SEHK Subsidiary is reliant in providing the China Connect Service; and

(i) any delay or failure to execute, or any error in matching or executing, any China Connect order due to reasons beyond the control of SEHK, HKEx or the relevant SEHK Subsidiary, the Bank or any Related Person, including but not limited to any action or decision taken or made, or not taken or made, by any China Connect Authority or any other relevant governmental or regulatory body.

If there is any delay or failure to send any order cancellation requests in any circumstance described in paragraph (e) above, I/we shall, in the event such order is matched and executed, remain responsible for fulfilling any settlement obligations in respect of such transaction.

I/We acknowledge that HKEx, SEHK, SEHK Subsidiaries, SSE, SZSE, the subsidiaries of any China Connect Market and their respective directors, employees and agents are not responsible or held liable for any such losses.

32 Operational Hours

SEHK has absolute discretion to determine from time to time the operational hours of the China Connect Service, and will have absolute discretion to change the operational hours and arrangements of the China Connect Service at any time and without advance notice whether on a temporary basis or otherwise. The Bank shall not be under any obligation to inform me/us of any such determinations by the SEHK as to the operational hours of the China Connect Service.

Where, for example, there is any price sensitive information relating to a Mainland China Listco during a time when China Connect Service is not in operation, China Connect Securities issued by or in respect of the Mainland China Listco may continue to trade on the relevant China Connect Market and the price of such China Connect Securities may move significantly. In such case, Northbound investors will not be able to trade in such securities until the next available Trading Day under China Connect.

33 Margin Trading

Subject to certain conditions prescribed by the China Connect Authorities, investors may conduct margin trading in China Connect Shares determined by the relevant China Connect Authorities to be eligible for margin trading (“Eligible Margin Trading Shares”). The HKEx will from time to time publish a list of Eligible Margin Trading Shares. A China Connect Market may suspend margin trading activities in any specific A Share if the volume of margin trading activities in such A Share exceeds a threshold determined by such China Connect Market and resume margin trading activities in such A share when the volume of margin trading activities drops below a prescribed threshold. Where the SEHK is notified by the relevant China Connect Market that a suspension or resumption involves a security on the list of Eligible Margin Trading Shares, the HKEx will disclose such information on its website. In such circumstances, any margin trading (except for margin trading in respect of China Connect Shares buy orders) in the relevant China Connect Share shall be suspended and/or resumed accordingly. The relevant China Connect Market reserves the right to require at some future date for margin trading orders to be flagged when routed to China Connect. Neither the Bank nor any Related Person shall have any obligation to update me/us in respect of the list of Eligible Margin Trading Shares or any restrictions or suspensions in respect of margin trading from time to time.

34 Rights Issuances

Where I/we receive any form of entitlement security from the issuer of a China Connect Security, if such entitlement security:

(a) is a China Connect Security, I/we shall be permitted to buy and sell the entitlement security through China Connect;

(b) is not a China Connect Security but is a RMB denominated security listed on a China Connect Market, I/we may be allowed to sell the entitlement security through China Connect but will not be permitted to buy such entitlement security;

(c) is a security listed on a China Connect Market but is not traded in RMB, I/we will not be allowed to buy or sell the entitlement security through China Connect; and

(d) is not listed on a China Connect Market, I/we shall not be allowed to buy or sell the entitlement security on China Connect unless and until appropriate arrangements (if any) have been provided by HKSCC. It is possible that no such alternative arrangements will be provided.

35 Odd Lot Trading

Odd lot trading in China Connect Shares is available only for sell orders and all odd lots must be sold in one single order. A board lot order may be matched with different odd lot sell orders, resulting in odd lot trades. Board lot and odd lot orders are matched on the same platform on China Connect and subject to the same share price. The maximum order size is 1 million shares and the tick size is uniformly set at RMB0.01.

36 Stock Borrowing and Lending

The SEHK has announced that stock borrowing and lending will be permitted for eligible China Connect Shares as specified by the relevant China Connect Market for the purpose of (a) covered short selling and (b) satisfying the Pre-Trade Checking requirement. Stock borrowing and lending of eligible China Connect Shares will be subject to restrictions set by SEHK and the relevant China Connect Market, including but not limited to the following:

(a) stock borrowing and lending agreements for the purpose of covered short selling shall have a duration of not more than one month;

(b) stock borrowing and lending agreements for the purpose of satisfying the Pre-Trade Checking requirement shall have a duration of not more than one day (and roll-over is not permitted);

(c) stock lending will be restricted to certain types of persons to be determined by the relevant China Connect Market; and

(d) stock borrowing and lending activities will be required to be reported to SEHK.

The relevant China Connect Market will determine a list of China Connect Shares eligible for stock borrowing and lending. Special China Connect Securities are not eligible for stock borrowing and lending for the purpose of covered short selling (but are eligible for the purpose of satisfying the Pre-Trade Checking requirement). The Bank will be required to provide such information to any relevant Exchange Participant (which may include the custodial agent) to enable such Exchange Participant to comply with its monthly reporting requirements in respect of stock borrowing and lending activities with respect to China Connect Shares. This may include (amongst others) details of the borrower, lender, amount of shares borrowed/lent, amount of shares outstanding and date of borrowing/returning.

Investors are advised to refer to the relevant provisions from time to time applicable in the SEHK China Connect Rules (as and when these are published) and in the China Connect Laws and China Connect Rules.

37 RMB Conversion

RMB is not freely convertible at present. The actual conversion arrangements will depend on the restrictions prevailing at the relevant time. Any conversion of any currency into RMB pursuant to Clause 8 (Settlement and Currency Conversion) of the China Connect Terms may be subject to such restrictions. Settlement of a Northbound buy order may be delayed and/or fail if there is a delay in converting the relevant currency into RMB. Any risk, loss or cost resulting from any such delay or failure of settlement shall be borne by me/us.

Risks associated with investing in China Connect Securities

38 ChiNext Shares

ChiNext Shares involve a high investment risk. In particular, profitability and other financial  requirements for listing on the ChiNext Board are less stringent than the Main Board and the SME Board of the SZSE. I/we acknowledge that I/we should make the decision to invest only after due and careful consideration.

Companies listed on the ChiNext Board may include enterprises in the innovation and technology sector as well as other start-up and/or growth enterprises with smaller operating scale and share capital. Stock prices may also be more susceptible to manipulation due to fewer circulating shares. Accordingly, the ChiNext Shares may be very volatile and illiquid. In addition, current information on such companies may be limited and may not be widely available.

It may be more common and easier for companies listed on the ChiNext Board to be delisted. The ChiNext Shares may become very illiquid after delisting. I/We acknowledge that I/we may suffer a total loss of my/our investment in the event of a delisting.

I/We acknowledge that I/we should seek independent professional advice if I am/we are uncertain of or have not understood any aspect of this risk disclosure statement or the nature and risks involved in trading of ChiNext Shares.

39 Other risks associated with investing in China Connect Securities

General Mainland China related risk

Mainland China is an emerging market that possesses one or more of the following characteristics: a certain degree of political instability, relatively unpredictable financial markets and economic growth patterns, a financial market that is still at the development stage or a weak economy. Emerging markets investments usually result in higher risks such as event risk, political risk, economic risk, credit risk, currency rate risk, market risk, liquidity/gapping risk, regulatory/legal risk, trade settlement, processing and clearing risks and bondholder/shareholder risk.

Equity risk

Investing in China Connect Securities may offer a higher rate of return than investing in short term and longer term debt securities. However, the risks associated with investments in China Connect Securities may also be higher, because the investment performance of China Connect Securities depends upon factors which are difficult to predict. Such factors include the possibility of sudden or prolonged market declines and risks associated with individual companies. The fundamental risk associated with any equity portfolio is the risk that the value of the investments it holds might suddenly and substantially decrease in value.

General legal and regulatory risk

I/We must comply with all China Connect Laws and China Connect Rules. Furthermore, any change in any China Connect Laws or China Connect Rules may have an impact on the market sentiment which may in turn affect the performance of China Connect Securities. It is impossible to predict whether such an impact caused by any such change will be positive or negative for China Connect Securities. In the worst case scenario, I/we may lose a material part of my/our investments in China Connect Securities. In addition, any litigation or other legal actions brought before the courts in Mainland China will be subject to Mainland China laws, rules and procedures, which are not the same as those which apply to the courts in Hong Kong.

Currency risk

RMB is not yet freely convertible, and is subject to foreign exchange controls and restrictions. Particularly, conversion of RMB through banks in Hong Kong may be subject to certain restrictions prevailing at the relevant time. It may be difficult for investors to convert RMB into Hong Kong dollars or other currencies or vice versa at any specific time, and conversion will be subject to conversion costs and such costs and timings for conversion may not be of my/our preference.

In addition, the value of RMB against Hong Kong dollars or other foreign currencies may be affected by a wide range of factors. There is no guarantee that RMB will not depreciate. A depreciation of RMB may result in a decrease in the market value of RMB securities and the realisation price of RMB securities. Non-RMB based investors who are trading in RMB securities, may also sustain loss in the event that they subsequently convert any RMB proceeds back to Hong Kong dollars or other base currencies.

There are also significant restrictions on the remittance of RMB into and out of Mainland China. If the issuer of RMB securities is not able to remit RMB to Hong Kong or make distributions in RMB due to exchange controls or other restrictions, the issuer may make distributions (including dividends and other payments) in other currencies. Investors may therefore be exposed to additional foreign exchange risk and liquidity exposures.

The liquidity and trading price of China Connect Securities may be adversely affected by the limited availability of RMB outside Mainland China and restrictions on the conversion of RMB. These factors may affect the liquidity of RMB for investors and accordingly adversely affect the market demand for China Connect Securities.

Explanation of General Risks Associated with Exchange-Traded Derivative Products

Trading in derivative warrant, Callable Bull/Bear Contracts (CBBC), synthetic Exchange Traded Funds (ETFs) and Leveraged and Inverse products involve high risks and may not be suitable for every investor. China CITIC Bank International (the "Bank") strongly advise investors to have a thorough understanding of the product as well as the terms and conditions of the derivative warrant, CBBC, synthetic ETFs and Leveraged and Inverse products being offered and / or consult professional investment advisers before trading. The risks set out below may not cover all risks on trading derivative warrant, CBBC, synthetic Exchange Traded Funds (ETFs) and Leveraged and Inverse products. More information can be found in Hong Kong Exchanges and Clearing Limited (the "HKEx") website (www.hkex.com.hk) and Securities and Futures Commission ("SFC") website (www.sfc.hk).

1. Risks Involved in Trading Derivative Warrant and Callable Bull/Bear Contracts (CBBCs)

a. Issuer default Risk

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

b. Uncollateralised product risk

Uncollateralised Derivative Warrants and CBBCs are not asset backed.  In the event of issuer bankruptcy, investors can lose their entire investment.  Investors should read the listing documents to determine if a product is uncollateralised.

c. Gearing Risk

Derivative Warrants and CBBCs are leveraged and can change in value rapidly according to the gearing ratio relative to the underlying assets.  Investors should be aware that the value of a Derivative Warrants and CBBCs may fall to zero resulting in a total loss of the initial investment.

d. Expiry considerations

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

e. Extraordinary price movements

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

f. Foreign exchange risk

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

g. Liquidity risk

The Hong Kong Exchanges and Clearing Limited requires all Derivative Warrants and CBBCs issuers to appoint a liquidity provider for each individual issue.  The role of liquidity providers is to provide two way quotes to facilitate trading of their products.  In the event that a liquidity provider defaults or ceases to fulfill its role, investors may not be able to buy or sell the product until a new liquidity provider has been assigned.

Additional Risks Involved in Trading Derivative Warrants

h. Time decay risk

All things being equal, the value of a derivative warrant will decay over time as it approaches its expiry date.  Derivative warrants should therefore not be viewed as long term investments. 

i. Volatility risk 

Prices of derivative warrants can increase or decrease in line with the implied volatility of underlying asset price.  Investors should be aware of the underlying asset volatility.

Additional Risks Involved in Trading CBBCs

j. Mandatory call risk

Investors trading CBBCs should be aware of their intraday “knockout” or mandatory call feature.  A CBBC will cease trading when the underlying asset value equals the mandatory call price/level as stated in the listing documents.  Investors will only be entitled to the residual value of the terminated CBBC as calculated by the product issuer in accordance with the listing documents.  Investors should also note that the residual value can be zero.

k. Funding costs 

The issue price of a CBBC includes funding costs.  Funding costs are gradually reduced over time as the CBBC moves towards expiry.  The longer the duration of the CBBC, the higher the total funding costs.  In the event that a CBBC is called, investors will lose the funding costs for the entire lifespan of the CBBC.  The formula for calculating the funding costs are stated in the listing documents.

l. Trading of CBBC close to Call Price

When the underlying asset is trading close to the Call Price, the price of a CBBC may be more volatile with wider spreads and uncertain liquidity. CBBC may be called at any time and trading will terminate as a result.

However, the trade inputted by the investor may still be executed and confirmed by the Exchange Participants after the mandatory call event since there may be some time lapse between the mandatory call event time and suspension of the CBBC cancelled. Therefore, investors should be aware of the risk and ought to apply special caution when the CBBC is trading close to the Call Price.

m. CBBC with overseas underlying assets

Investors trading CBBC with overseas underlying assets are exposed to an exchange rate risk as the price and cash settlement amount of the CBBC are converted from a foreign currency into Hong Kong dollars. Exchange rates between currencies are determined by forces of supply and demand in the foreign exchange markets which are affected by various factors.

Besides, CBBC issued on overseas underlying assets may be called outside the Exchange’s trading hours. In such case, the CBBC will be terminated from trading on the Exchange in the next trading session or soon after the issuer has notified the Exchange about the occurrence of the mandatory call event.

2. Risks Involved in Trading Exchange Traded Funds (”ETFs”)

a. Market Risk

An ETF is exposed to the economic, political, currency, legal and other risks of a specific sector or market related to the index and the market that it is tracking. ETFs are typically designed to track the performance of certain indices, market sectors, or groups of assets such as stocks, bonds, or commodities. ETF managers may use different strategies to achieve this goal, but in general they do not have the discretion to take defensive positions in declining markets. Investors must be prepared to bear the risk of loss and volatility associated with the underlying index/assets.

b. Tracking errors

Tracking errors refer to the disparity in performance between an ETF and its underlying index/assets. Tracking errors can arise due to factors such as the impact of transaction fees and expenses incurred to the ETF, changes in composition of the underlying index/assets, and the ETF manager’s replication strategy. Depending on its particular strategy, an ETF may not hold all the constituent securities of an underlying index in the same weightings as the constituent securities of the index. Therefore, the performance of the securities underlying the ETF as measured by its NAV may outperform or under-perform the index.

c. Trading at discount or premium

An ETF may be traded at a discount or premium to its Net Asset Value (NAV). This price discrepancy is caused by supply and demand factors, and may be particularly likely to emerge during periods of high market volatility and uncertainty. This phenomenon may also be observed for ETFs tracking specific markets or sectors that are subject to direct investment restrictions. The supply and demand imbalance can only be addressed by creating and redeeming additional units. So, disruption to the creation or redemption of units may result in the ETF trading at a higher premium or discount to its NAV than may normally be the case for a traditional ETF with no such restriction.

d. Passive investments risk

ETF is not "actively managed" and therefore, when there is a decline in the underlying index, the ETF that tracks the index will also decrease in value. The ETF Manager will not take defensive positions in declining markets, investors may lose a significant part of their respective investments if the underlying Index falls.

e. Risks relating to ETF termination

An ETF, like any fund, may be terminated early under certain circumstances, for example, where the index is no longer available for benchmarking or if the size of the ETF falls below a pre-determined NAV threshold as set out in the constitutive documents and offering documents. Investors should refer to the section in the offering document relating to termination for further details. Investors should also note that the market-making activities and the trading of ETF units may be adversely affected in the secondary market as the creation of units will cease once the termination of the ETF is announced. As a result, the trading price of such ETF units may become very volatile resulting in substantial losses to investors. Furthermore, the NAV of an ETF may drop substantially once the expenses and costs of the termination is set aside upon announcement of the termination. Investors may suffer a substantial loss as a result of these expenses and costs associated with the termination.

f. Foreign Exchange Risk

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

g. Liquidity Risk

Securities Market Makers (SMMs) are Exchange Participants that provide liquidity to facilitate trading in ETFs. Although most ETFs are supported by one or more SMMs, there is no assurance that active trading will be maintained. In the event that the SMMs default or cease to fulfill their role, investors may not be able to buy or sell the product. Besides, a higher liquidity risk is involved if an ETF uses financial derivative instruments, including structured notes and swaps, which are not actively traded in the secondary market and whose price transparency is not as easily accessible as physical securities. This may result in a bigger bid and offer spread. These financial derivative instruments also are susceptible to more price fluctuations and higher volatility. Hence, they can be more difficult and costly to unwind early, especially when the instruments provide access to a restricted market where liquidity is limited in the first place.

h. Counterparty risk involved in ETFs with different replication strategies

1. Full replication and representative sampling strategies

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

2. Synthetic replication strategies

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

i. Swap-based ETFs

• Total return swaps allow ETF managers to replicate the benchmark performance of ETFs without purchasing the underlying assets.
• Swap-based ETFs are exposed to counterparty risk of the swap dealers and may suffer losses if such dealers default or fail to honor their contractual commitments.

ii. Derivative embedded ETFs

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

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

i. Early Unwinding of Derivatives Risk

Synthetic ETFs typically invest in derivatives to track an index’s performance. The costs associated with the unwinding of these derivatives before maturity may vary depending on prevailing market conditions. Such costs may be significant, particularly during times of high market volatility. Hence, in the event of redemption or if the synthetic ETF is terminated (for example, due to the reason that the fund size becomes too small), the proceeds payable to investors may be significantly less than the net asset value of the fund units as a result of the cost associated with unwinding of the derivatives before maturity. This may lead to substantial loss to investors.

j. Tax and other risks

Like all investments, an ETF may be subject to tax imposed by the local authorities in the market related to the index that it tracks, emerging market risks and risks in relation to the change of policy of the reference market.

k. Risks relating to Mainland capital gains tax liability

There are risks and uncertainties concerning the application of the Mainland capital gains tax ("CGT") regime on investments by foreign investors (including non-Mainland domiciled investment funds, QFIIs and RQFIIs) in Mainland securities, and such tax is not currently enforced.

It is a matter of professional and commercial judgement on the part of each fund manager, acting in the best interest of investors after taking professional tax advice, to consider and decide whether to make provision (and if so, the extent and provisioning policy) for the ETF’s potential CGT liability or to change the ETF’s existing CGT provisioning policy from time to time.

Depending on the tax advice obtained and other relevant factors, each ETF’s tax provisioning policy may be different. There may be ETFs without making any CGT provision at all. Even if an ETF makes CGT provision, such provision may be excessive or inadequate. The Mainland tax rules and policies are subject to changes. There are risks that CGT may be enforced by the Mainland tax authorities and that such enforcement may be on a retrospective basis. If and when CGT is collected by the Mainland tax authorities, any shortfall between the provisions (if any) and actual tax liabilities will have to be paid out of the ETF's assets and could have a material adverse impact on the ETF's net asset value (NAV), whereby causing significant losses to investors.

Enforcement of the CGT by Mainland tax authorities and/or change in tax provisioning policy by a fund manager will impact investors remaining in the ETF. Investors who have sold/redeemed their interests prior to such enforcement and/or change will not be impacted. Likewise, such investors will not benefit from any release of tax provisions back into the ETF. Investors may be advantaged or disadvantaged depending upon whether and how the CGT will ultimately be taxed and when the investors invest in the ETF.

Investors should carefully read the CGT provisioning policy of an ETF (which may have substantial exposure to Mainland securities whether through RQFII, QFII or other Mainland market access derivative products) and the associated risks as disclosed in the offering documents before investing in the ETF. If in doubt, they should consult their professional advisors.

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

3. Risks Involved in Trading Leveraged and inverse products (“L&I Products”)

a. Investment risk

Trading L&I Products involves investment risk and are not intended for all investors. There is no guarantee of repaying the principal amount.

b. Volatility risk

Prices of L&I Products may be more volatile than conventional exchange traded funds (ETFs) because of using leverage and the rebalancing activities.

c. Unlike conventional ETFs

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

d. Long-term holding risk

L&I Products are not intended for holding longer than the rebalancing interval, typically one day. Daily rebalancing and the compounding effect will make the L&I Product’s performance over a period longer than one day deviate in amount and possibly direction from the leveraged/inverse performance of the underlying index over the same period. The deviation becomes more pronounced in a volatile market.

As a result of daily rebalancing, the underlying index’s volatility and the effects of compounding of each day’s return over time, it is possible that the leveraged product will lose money over time while the underlying index increases or is flat. Likewise, it is possible that the inverse product will lose money over time while the underlying index decreases or is flat.

e. Risk of rebalancing activities

There is no assurance that L&I Products can rebalance their portfolios on a daily basis to achieve their investment objectives. Market disruption, regulatory restrictions or extreme market volatility may adversely affect the rebalancing activities.

f. Liquidity risk

Rebalancing typically takes place near the end of a trading day (shortly before the close of the underlying market) to minimize tracking difference. The short interval of rebalancing may expose L&I Products more to market volatility and higher liquidity risk.

g. Intraday investment risk

Leverage factor of L&I Products may change during a trading day when the market moves but it will not be rebalanced until day end. The L&I Product’s return during a trading day may be greater or less than the leveraged/opposite return of the underlying index.

h. Portfolio turnover risk

Daily rebalancing causes a higher levels of portfolio transaction when compared to conventional ETFs, and thus increases brokerage and other transaction costs.

i. Correlation risk

Fees, expenses, transactions cost as well as costs of using financial derivatives may reduce the correlation between the performance of the L&I Product and the leveraged/inverse performance of the underlying index on a daily basis.

j. Termination risk

L&I Products must be terminated when all the market makers resign. Termination of the L&I Product should take place at about the same time when the resignation of the last market maker becomes effective.

k. Leverage risk (for leveraged products only)

The use of leverage will magnify both gains and losses of leveraged products resulting from changes in the underlying index or, where the underlying index is denominated in a currency other than the leveraged product's base currency, from fluctuations in exchange rates.

l. Unconventional return pattern (for inverse products only)

Inverse products aim to deliver the opposite of the daily return of the underlying index. If the value of the underlying index increases for extended periods, or where the exchange rate of the underlying index denominated in a currency other than the inverse product's base currency rises for an extended period, inverse products can lose most or all of their value.

m. Inverse products vs short selling (for inverse products only)

Investing in inverse products is different from taking a short position. Because of rebalancing, the performance of inverse products may deviate from a short position in particular in a volatile market with frequent directional swings.

Disclaimer:

This document does not disclose all risks and features of the exchange-traded derivative products mentioned herein which are traded on the Hong Kong Exchanges and Clearing Limited (the "HKEx"). It is for general reference and information purposes only and has not taken into account of your personal circumstances. The information herein regarding exchange-traded derivative products is based on the information from sources which the Bank believes to be reliable but which has not been verified independently. For more detailed information regarding financial derivative products, you can refer to the websites of HKEx (www.hkex.com.hk/eng/index.htm) and SFC (www.sfc.hk/sfc/html/EN). 

China CITIC Bank International Limited (the "Bank") makes no representations or warranties, expressed or implied, as to the completeness or accuracy of the contents in this document. The Bank and its affiliates accepts no responsibility for any loss, damage, liability or consequence whatsoever arising from or in connection with the reliance upon or use of this document by anybody.

Before making any investment decision, you should read carefully the applicable terms and conditions, offering documents and any other relevant documentation in relation to the product and transaction contemplated. You should not deal in any exchange-traded derivative products unless you understand the nature of the product, its risks and the extent of the exposure to risks. Consideration should also be given to your own investment experience, objectives, financial position, risk tolerance level, particular circumstances and needs amongst the others. Your investment decision may also be affected by other factors whether in relation to the product, the transaction, product suitability, matters relating to legal, tax, financial, accounting or otherwise.  You should make your own assessment and are strongly advised to obtain independent professional advice in case of doubt or where necessary.

This document does not and shall not in any event constitute, nor is it intended to be nor should it be construed or deemed as offer or solicitation to invest in any investment products. Neither does or shall this document in any event constitute or be deemed as an investment advice or recommendation.  The Bank and its affiliates shall not be responsible for any loss caused by the investment in any products mentioned herein.

This document is not intended to be distributed to persons in any jurisdictions or countries that will violate the law or regulation, and it is not intended to be used by such persons.

Agreement for Market Data Display Services (Usage-Based Services/Nonprofessional Subscriber Status)

China CITIC Bank International Limited ("Vendor") agrees to make "Market Data" available to you pursuant to the terms and conditions set forth in this agreement. By executing this Agreement in the space indicated below, you ("Subscriber") agree to comply with those terms and conditions. Section 1 sets forth terms and conditions of general applicability. Section 2 applies insofar as Subscriber receives and uses Market Data made available pursuant to this Agreement as a Nonprofessional Subscriber.

TERMS AND CONDITIONS OF GENERAL APPLICABILITY

1. MARKET DATA DEFINITION – For all purposes of this Agreement, "Market Data" means (a) last sale information and quotation information relating to securities that are admitted to dealings on the New York Stock Exchange ("NYSE"), (b) such bond and other equity last sale and quotation information, and such index and other market information, as United States-registered national securities exchanges and national securities associations (each, an "Authorizing SRO") may make available and as the NYSE may from time to time designate as "Market Data"; and (c) all information that derives from any such information.

2. PROPRIETARY NATURE OF DATA – Subscriber understands and acknowledges that each Authorizing SRO and Other Data Disseminator has a proprietary interest in the Market Data that originates on or derives from it or its market(s).

3. ENFORCEMENT – Subscriber understands and acknowledges that (a) the Authorizing SROs are third-party beneficiaries under this Agreement and (b) the Authorizing SROs or their authorized representative(s) may enforce this Agreement, by legal proceedings or otherwise, against Subscriber or any person that obtains Market Data that is made available pursuant to this Agreement other than as this Agreement contemplates. Subscriber shall pay the reasonable attorney's fees that any Authorizing SRO incurs in enforcing this Agreement against Subscriber.

4. DATA NOT GUARANTEED – Subscriber understands that no Authorizing SRO, no other entity whose information is made available over the Authorizing SROs' facilities (an "Other Data Disseminator") and no information processor that assists any Authorizing SRO or Other Data Disseminator in making Market Data available (collectively, the "Disseminating Parties") guarantees the timeliness, sequence, accuracy or completeness of Market Data or of other market information or messages disseminated by any Disseminating Party. Neither Subscriber nor any other person shall hold any Disseminating Party liable in any way for (a) any inaccuracy, error or delay in, or omission of, (i) any such data, information or message or (ii) the transmission or delivery of any such data, information or message, or (b) any loss or damage arising from or occasioned by (i) any such inaccuracy, error, delay or omission, (ii) non-performance or (iii) interruption in any such data, information or message, due either to any negligent act or omission by any Disseminating Party, to any "force majeure" (e.g., extraordinary weather conditions, earthquake or other act of God, war, insurrection, riot, labor dispute, accident, action of government, communications or power failure, equipment or software malfunction) or to any other cause beyond the reasonable control of any Disseminating Party.

5. PERMITTED USE – Subscriber shall not furnish Market Data to any other person or entity. If Subscriber receives Market Data other than as a Nonprofessional Subscriber, it shall use Market Data only for its individual use in its business.

6. DISSEMINATION DISCONTINUANCE OR MODIFICATION – Subscriber understands and acknowledges that, at any time, the Authorizing SROs may discontinue disseminating any category of Market Data, may change or eliminate any transmission method and may change transmission speeds or other signal characteristics. The Authorizing SROs shall not be liable for any resulting liability, loss or damages that may arise therefrom.

7. DURATION; SURVIVAL – This Agreement remains in effect for so long as Subscriber has the ability to receive Market Data as contemplated by this Agreement. In addition, Vendor may terminate this Agreement at any time, whether at the direction of the Authorizing SROs or otherwise. Paragraphs 2, 3 and 4, and the first two sentences of Paragraph 8, survive any termination of this Agreement.

8. MISCELLANEOUS – The laws of the State of New York shall govern this Agreement and it shall be interpreted in accordance with those laws. This Agreement is subject to the Securities Exchange Act of 1934, the rules promulgated under that act, and the joint-industry plans entered into pursuant to that act. This writing contains the entire agreement between the parties in respect of its subject matter. Subscriber may not assign all or any part of this Agreement to any other person. The person executing this Agreement below represents and warrants that he or she has legal capacity to contract and, if that person is executing this Agreement on behalf of a proprietorship or a business, partnership or other organization, represents and warrants that he or she has actual authority to bind the organization.

I, the "Subscriber" to which the preceding terms and conditions refer, acknowledge that I have read the preceding terms and conditions,  that I understand them and that I hereby agree to comply with those terms and conditions.

Customer Declaration

I/We confirm that:

1. I/We have received, read and fully understood and agreed to be bound by China CITIC Bank International Limited's (the “Bank”) General Terms and Conditions and all applicable Specific Terms and Conditions referred to the General Terms and Conditions (the “Applicable Ts&Cs”) and Terms and Conditions for One Account.

2. I/We warrant that the above information is true, accurate and complete and authorize the Bank to verify it with any source.  I/We hereby declare that all other information that I/we have supplied to the Bank relating to this form or the One Account is true, accurate and complete. I/We will also undertake to notify the Bank in writing immediately of any changes to any information I/we have supplied to the Bank (in this form or otherwise).  Until the Bank receives and complete the update of such notification of change of information from me/us, the Bank shall be entitled to rely on the information provided by me/us to the Bank (in this form or otherwise).

3. I/We consent to the use of my/our personal data in accordance with your “Notice to Customers and Other Individuals Relating to the Personal Data (Privacy) Ordinance and the Code of Practice on Consumer Credit Data” from time to time.

4. Subject to applicable laws, I/we hereby consent for the Bank to disclose and share information, documentation or certification concerning myself/ourselves, my/our beneficiaries and third parties for whom I am/we are acting as agent, including but not limited to my/our personal and account information or records, with any third party, including but not limited to any legal, regulatory, government, tax or law enforcement body within or outside of Hong Kong as is required for the Bank to provide services to me/us, including where necessary to establish my/our tax liability in any jurisdiction and also reporting of any reportable account(s) that may be reported to the Inland Revenue Department of the Government of the Hong Kong Special Administrative Region of the People’s Republic of China in which the account(s) is/are maintained and exchanged with tax authorities of another jurisdiction or jurisdiction in which the account holder may be resident for tax purposes pursuant to the competent authority agreement to exchange financial account information.

5. The Risk Disclosure Statements contained in the Terms and Conditions for One Account have been provided to me/us and that I/we have been invited to read the same, to ask questions and to take independent advice (if I/we wish).

6. I am/We are acting as principal and not trading on behalf of any other person and I am/we are the person(s) ultimately responsible for originating the instructions in relation to and the person(s) that stands to gain the commercial or economic benefit of each transaction in the One Account and/or bear the commercial or economic risk.

7. I/We agree that my/our signature(s) in this form shall be the signature(s) specimen for the newly opened One Account.

8. I/We acknowledge and agree that any payment by the Bank, including any payment made under Applicable Ts&Cs, may be subject to withholding and deduction as required under applicable laws, regulations, directives and guidelines, including under any Foreign Law Requirement (as defined in the Applicable Ts&Cs). Any amount as withheld may be held in whatever account or in whatever manner determined by the Bank at its sole discretion.

9. I/We acknowledge that I am/we are fully responsible for my/our own tax affairs, and that I am/we are solely liable for understanding and complying with any legal, tax, foreign exchange control or regulatory obligations that may apply to me/us in any relevant jurisdiction. I/We confirm that I/we have and will continue to fully comply with relevant laws and regulations. During the tenure of business relationship, I/we will not carry out any transactions, or aid and abet, or facilitate the laundering of the related proceeds that links to unlawful activities, including but not limited to tax evasion, drug trafficking, other indictable offence, money laundering or transactions with terrorists, through my/our accounts with the Bank. I/We understand my/our tax status and transaction activity is subject to screening and monitoring as part of the Bank’s AML review in compliance with Hong Kong’s regulatory requirements.

10. No provision in this declaration and other sections of this application form shall prejudice any consent, representation, undertaking or indemnity given by me/us (or on my/our behalf) or any other obligation or liability undertaken by me/us (or on my/our behalf) under or in connection with any other agreement between myself/ourselves and the Bank, including but not limited to the Applicable Ts&Cs.

11. I/We represent and warrant that I am/we are not a U.S. person (i.e. a citizen or resident of the United States) or resident of Canada for purposes of U.S. or Canada tax laws and that I am / we are not acting for, or on behalf of, a U.S. / Canada person. If my/our tax status changes and I/we become a U.S. person or resident of Canada, I/we must notify the Bank within 30 days and I am / we are fully aware that any investment products that I am / we are holding will immediately be redeemed and sale proceeds will be subject to U.S. / Canada tax information reporting. For purpose of complying with applicable laws and regulations (including but not limited to applicable U.S. / Canada tax laws), I/we waive any bank secrecy, privacy or data protection rights related to my account.

12. (a) I am/we are not a director(s), 10% or in excess of 10% beneficial shareholder(s) or policy-making officer(s) of a company/companies publicly traded in the U.S.; and

(b) I am/we are not at the time the One Account is opened, and will not at any time during the continuance of the One Account, hold in such account or effect transactions through such account, securities of any company with securities traded in the U.S. in which I am/we are:

(i) direct or indirect owner or beneficial owner (which would include the power to vote shares pursuant to trust or other instrument) of 5% or more than 5% of any class of voting securities of the company;

(ii) in a direct or indirect management or other decision-making position in the company;

(iii) closely-related to (spouse, parent, sibling, in-law), financially dependent on, or the primary financial support for, any person who owns directly or indirectly outright or through beneficial ownership 5% or in excess of 5% of any class of voting securities in such company or holds a management or other decision-making position in such company; or

(iv) a member of a formal or informal group that acting together will control 5% or more than 5% of any class of voting securities of such company.

13. I / We represent for the purposes of any Northbound trading through China Connect that:

(a) (i) I am / we are not a Mainland China Resident / Mainland China Residents or an entity / entities incorporated or registered under the laws of Mainland China, (ii) if I am / we are a Mainland China Resident / Mainland China Residents, I am /we are using funds lawfully owned by me / us and located outside Mainland China to make investments in China Connect Securities or (iii) if I am / we are an entity / entities incorporated or registered under the laws of Mainland China, my / our investment in China Connect  Securities has been conducted pursuant to any program (including the Qualified Domestic Institutional Investor Program, if applicable) approved by, or any other approval of, any competent Mainland China regulator; and

(b) My / our investment in China Connect Securities does not violate the laws and regulations of Mainland China, including those in relation to foreign exchange control and reporting.

14. I / We understand and acknowledge that RMB is currently not freely convertible and conversion of RMB through banks in Hong Kong may be subject to certain restrictions prevailing at the relevant time. Accordingly, I / we will be subject to RMB exchange rate risk and conversion risk if any taxes, levies, fees or charges imposed in relation to RMB denominated securities are charged in a currency other than RMB.

15. I/We will not hold the Bank responsible or claim against the Bank for any of my/our loss or damage relating thereto except due to the negligence or wilful default of the Bank.

16. I/We acknowledge that I/we have read and understand the negative disclosure notice that the Currency-Linked Deposit (CLD), Structured Deposit and bearer Certificates of Deposit are not protected deposits and are not protected by the Deposit Protection Scheme in Hong Kong.

FATCA and CRS Self Certification

17. I / We undertake to advise the Bank of any change in circumstances which affects the tax residency status of the individual(s) identified in this form or causes the information contained herein to become incorrect, and to provide the Bank with a suitably updated self-certification form within 30 days of such change in circumstances. 

Deposit Protection Scheme Disclosure

The following types of deposit maintained with China CITIC Bank International Limited are deposits qualified for protection by the Deposit Protection Scheme in Hong Kong:

• Current Account
• Savings Account
• Deposit maintained under One Account (One Account “Deposit”)
• Time Deposit with a maturity not exceeding 5 years
• Interest Rate Yield Enhancing Deposit
• Margin Account under Foreign Exchange and Gold Margin Trading Service

Negative Disclosure Notice for Currency-Linked Deposit, Structure Deposit and bearer Certificates of Deposit

Currency-Linked Deposit, Structured Deposit and bearer Certificates of Deposit are not a protected deposit and are not protected by the Deposit Protection Scheme in Hong Kong.

Disclosure statement in respect of the Bank’s independent status

The Bank is NOT an independent intermediary because (1) the Bank receives fees, commissions, or other monetary benefits from other parties. (which may include product issuers) in relation to our distribution of investment products to customers. For details, customers should refer to the Bank’s disclosure on monetary benefits which the Bank is required to deliver to customers prior to or at the point of entering into any transaction in investment products; and/or (2) the Bank receives non-monetary benefits from other parties, or have close links or other legal or economic relationships with issuers of products that the Bank may distribute to customers.

Terms and Conditions for eStatement and eAdvice Service (the “Service”)

These Terms and Conditions are a set of Specific Terms and Conditions referred to in the General Terms and Conditions which I/We have agreed to be bound by. I/We may from time to time use the eStatement and eAdvice Service (the “Service”) supplied by China CITIC Bank International Limited (the “Bank”), and agree that the Service will be subject to these Terms and Conditions, the General Terms and Conditions, Terms and Conditions for i-banking Service and such other terms as may be agreed between me/us and the Bank in relation thereto. I/We can review the most current version of these Terms and Conditions, the General Terms and Conditions, Terms and Conditions for i-banking Service at any time on the website of the Bank at www.cncbinternational.com

1. Definitions and Interpretation 

1.1 In these Terms and Conditions, the following words and expressions shall have the following meanings: 

(a) "Account" means an account maintained by me/us with the Bank; 

(b) "Advice" means any advice, report, confirmation, receipt, record, acknowledgement, notice, message or communication issued or made available by the Bank from time to time in paper form in relation to any Account, service or product offered by the Bank, and excludes a Statement; 

(c) "eAdvice" means an Advice issued or made available by the Bank from time to time in electronic form under the Service; 

(d) "eCorrespondence" means an eStatement or an eAdvice (or both). 

(e) "eStatement" means a Statement issued or made available by the Bank from time to time in electronic form under the Service; 

(f) "Hong Kong" means the Hong Kong Special Administrative Regions of the People’s Republic of China; 

(g) "i-banking Service" means any electronic or internet banking services from time to time supplied by the Bank, which enable me/us to give instructions to the Bank and/or obtain information from the Bank through internet at such website or portal as designated by the Bank from time to time or through such other means as the Bank may from time to time prescribe; 

(h) "Service" means the eStatement and eAdvice service which the Bank may provide pursuant to these Terms and Conditions; 

(i) "Statement" means any statement issued or made available by the Bank from time to time in paper form in relation to my/our Account, service or product offered by the Bank and excludes an Advice; and 

(j) "Telecommunications Equipment" includes mobile telephones, laptop computers, desktop personal computers, pocket personal computers, personal digital assistants and any other electronic media or equipment. 

2. Scopes of the Service 

2.1 I/We should have an i-banking Service with the Bank. I/We may use the Telecommunications Equipment, telecommunications service provider and computer software that is capable of receiving and reading the eCorrespondence, as accepted by the Bank from time to time. 

2.2 The eCorrespondence will be provided to me/us by placing it in my/our i-banking Service as determined by the Bank from time to time. 

2.3 Where an eCorrespondence is placed in my/our i-banking Service, the Bank has no obligation but may notify me/us that the latest eCorrespondence has been made available by sending a message to my/our mobile of one number or email address (or both) on the record. I/We should ensure the email address and mobile phone number on the Bank’s record are at all times valid, up-to-date and capable of receiving the eCorrespondence and any other messages from the Bank. 

2.4 Upon successful subscription to this Service, I/We understand and agree that the Bank will no longer provide the corresponding Statement or Advice in paper form. At my/our request, the Bank may at its discretion but not obliged to provide the corresponding Statement or Advice in paper form. The Bank has the right to charge a fee for providing the corresponding Statement or Advice to me/us. 

2.5 I/We agree to review and check my/our i-banking Service for eCorrespondence regularly and/or upon receiving the message notifying me/us the availability of eCorrespondence in my/our i-banking Services. I/We will advise the Bank promptly of any error, omission, discrepancy, unauthorized debit or irregularity in the entries or transactions shown in each eCorrespondence, whether caused by forged signature or other forgery, fraud, lack of authority or negligence of any person. I/We should notify the above error, omission, discrepancy, unauthorized debit or irregularity within 60 days (where the eStatement is a credit card eStatement) or within 90 days for all other eStatements. I/We understand if the Bank does not receive any such notice within the specified period, the eCorrespondence will be considered as correct, conclusive and binding. 

2.6 I/We understand that an eCorrespondence placed in my/our i-banking Service will only be available for a limited period as determined by the Bank from time to time. The Bank will periodically remove past eCorrespondence from my/our i-banking Service even if I/We have not reviewed, accessed or saved them. I/We confirm that I/We will save the eCorrespondence in my/our own computer storage or print a hard copy of the eCorrespondence for future reference. 

2.7 I/We understand that an eCorrespondence placed in my/our i-banking Service will be considered as having been delivered to me/us at the time it is placed in my/our i-banking Service according to the Bank’s record. 

2.8 I/We confirm that all information provided to the Bank for the purpose of or in connection with the Service is complete, accurate and up-to-date at all relevant times. I/We agree to notify the Bank promptly of any change in the information. 

2.9 Where an Account is in the name of two or more persons, by using the Service, any of those persons may access the Service singly even if I/We have specified to the Bank a different signing arrangement for the Account, and each of us will be bound by these Terms and Conditions. 

2.10 The Bank from time to time is entitled to modify, expand or reduce the scope and features of the Services with or without notice to me/us. In particular, the Bank may from time to time determine, add to or delete from the Service the types of Advices and Statement which will be offered a s eAdvices or eStatements, and the manner in which such eCorrespondence will be provided. 

3. Security 

3.1 I/We understand and accept all possible risks involved in how the Service is provided. Such risks may include that eCorrespondence may be intercepted, monitored, amended, tampered with or disclosed to other parties without my/our authorization. 

3.2 I/We are responsible for the security of my/our Telecommunications Equipment. I/We must take all reasonable precautions to prevent anyone else from accessing any confidential information including the eCorrespondence sent to my/our Telecommunications Equipment. 

3.3 I/We should never provide my/our account or personal data on screen following a website address or hyperlink from an eCorrespondence. All website addresses and hyperlinks authorized by the Bank are for my/our information only and the Bank will not require me/us to provide data in that manner. 

3.4 I/We should check the email address or website address of the sender of the eCorrespondence to ensure that the eCorrespondence is genuine and sent by the Bank. 

3.5 I/We must notify the Bank promptly and in such manner as the Bank may accept from time to time if I/We fail to receive the message as mentioned in section 2.3; fail to receive, access or view any eCorrespondence; or there is any delay in or any other problem with the receiving, accessing or viewing any eCorrespondence from the Bank. 

4. Limitation of Liability and Indemnification 

4.1 The Bank is not liable for loss, damage or expense of any kind which I/We may incur or suffer arising from or in connection with the following: (a) any failure or delay in providing the eCorrespondence for any reason (including as a result of failure or error of any computer or electronic system or equipment); (b) any error or omission in the eCorrespondence; (c) any disclosure of confidential information; (d) any loss or damage to my/our data, software, telecommunication equipment or other equipment arising from or in connection with my/our use of the Service; and (e) any suspension or termination of the Service under any other circumstances. 

4.2 The Bank is not liable for any loss, costs or damage of any kind incurred or suffered by me/us as a result of any interruption, delay or failure (whether total or partial) in providing the Service to me/us to the extent that it is attributable to any cause or circumstance that is beyond its reasonable control or the reasonable control of its agents or nominees (other than any such acts or omissions amounting to negligence or willful misconduct on the part of the Bank). 

4.3 I/We acknowledge there are certain security, corruption, transmission error and access availability risks associated with using the Service and I/we expressly assume such risks. The Bank makes no warranty or representation as to the foregoing. 

4.4 The Bank shall at all times be indemnified, reimbursed and held harmless by me/us from and against any and all claims, demands, causes of actions, liabilities, losses, damages, costs and expense which may at any time be imposed upon, incurred or suffered by, or asserted against the Bank in connection with any acts, omissions or circumstances arising out of or relating to these Terms and Conditions, or any breach by me/us of these Terms and Conditions, or any other matter or transaction contemplated by these Terms and Conditions (other than any such acts or omissions amounting to negligence or willful misconduct on the part of the Bank) 

4.5 The Bank does not warrant or represent that the eCorrespondence provided through i-banking Service is accurate, sufficient, up-to-date or error free. Some of the eCorrespondence available through i-banking Service may be identified on the screens or in any user guide in respect of any electronic media as subject to a disclaimer or other provisions. If I/We rely on that eCorrespondence, I/We do so subject to the disclaimer or those provisions. 

5. Suspension or Termination of Service 

5.1 The Bank reserves the right at any time and from time to time to modify, suspend or discontinue, temporarily or permanently, the Service (or any part thereof) for any reason without notice. In particular, the Bank will terminate the Services upon termination of the iBanking Services by me/us. 

5.2 Suspension or termination by me/us of the Service shall be effective only after written notice of such suspension or termination has been given to the Bank and the Bank has a reasonable opportunity to act upon the notice. 

5.3 Either party may terminate the Service any time by giving a thirty (30) days prior written notification the Bank may terminate the Service without any notice on the grounds that if I/we breach any of my/our obligations under these Terms and Conditions. 

5.4 Any suspension or termination of the Service does not affect the liabilities and rights between the Bank and me/us respectively before the date of suspension or termination. 

6. Fees and Costs 

6.1 I/We agree to pay such charges (if any) for the provision of the Service, as the Bank shall advise me/us from time to time. 

6.2 The Bank may vary its charges and the frequency and dates of payment of such charges on giving me/us not less than thirty (30) days notice. 

6.3 I/We authorize the Bank to debit any of my/our accounts with any charges, if any, for the provisions of this Service. 

7. Miscellaneous 

7.1 The Bank at any time has the right to amend or vary any provisions of these Terms and Conditions (including any fees and charges) by giving prior written notice to me/us in accordance with the requirements of applicable codes and guidelines. I/We will be bound be a variation unless the Bank has received notice to terminate the Service with effect before the date on which that variation takes effect. 

7.2 No act, omission or delay by the Bank shall be a waiver of the Bank’s right or remedy under these Terms and Conditions unless otherwise agreed in writing by the Bank. 

8. Rights of Third Party

8.1 Except as otherwise expressly stated in these Terms and Conditions, no one other than a party to these Terms and Conditions may enforce any of its terms under the Contracts (Rights of Third Parties) Ordinance, Cap. 623 of the Laws of Hong Kong. Where any clause of these Terms and Conditions entitles any third party to enforce any term of these Terms and Conditions under the Contracts (Rights of Third Parties) Ordinance, the parties reserve the right to vary that term or any other term of these Terms and Conditions without the consent of that third party. 

9. Law and Jurisdiction

9.1 These Terms and Conditions shall be governed by and construed in accordance with the laws of Hong Kong and the parties agree to submit to the non-exclusive jurisdiction of the Hong Kong courts. 

10. Governing Version

10.1 The English version of these Terms and Conditions shall prevail wherever there is a discrepancy between the English and the Chinese versions.

Risks for e-Statement / e-Advice service

1. Appropriate computer equipment and software, internet access and a specific email address provided and designated by the customer are required for using the Bank’s e-Statement / e-Advice service.

2. Internet and email services may be subject to certain IT risks and disruption. Customer need to understand and accept all possible risks involved in how the e-Statement / e-Advice service is provided. Such risks may include that eCorrespondence may be intercepted, monitored, amended, tampered with or disclosed to other parties without customer's authorization.

3. The customer may incur additional costs for using the Bank’s e-Statement / e-Advice service.

4. Email will be the customer’s only notice that the advices and statements that are supported by e-Statement / e-Advice service have been posted on the Bank’s website, and the customer should check his/her designated email address regularly for such notice. 

5. Revocation of consent to the Bank’s e-Statement / e-Advice service will be subject to the giving of such advance notice by the customer as the Bank may reasonably require.

6. The customer may be required to pay a reasonable charge for obtaining a hard copy of any Bank’s e-Statement / e-Advice that is no longer available for access and downloading through the Bank’s website.

Important Notes for e-Statement / e-Advice service

1. Email notification will be sent to you on the day of e-Statement / e-Advice delivery to you designated email address maintained in our Bank’s record. Please keep the Bank informed of your current email address to ensure you can receive such email notification.

2. Customer should promptly review the e-Statement / e-Advice posted on the Bank’s website upon receiving the email notification from the Bank to ensure that any errors are detected and reported to the Bank as soon as practicable.

Declaration - eStatement and eAdvice Service

I acknowledged that I have read, fully understand and accept the contents of the Terms and Conditions for eStatement and eAdvice Service and the Risks and Important Notes for eStatement and eAdvice Service and agree to be bound by the same.