This Margin Trading Risk Disclosure (this “Disclosure”) is provided by MATRIX GELEPHU PTE LTD (the “Company”) to inform you of the material risks associated with trading Investment Products on margin.
This Disclosure should be read together with, and is supplemental to, the Client Agreement entered into between you and the Company (the “Client Agreement”). Certain risks relating to margin trading are also set out in clause 9 of Schedule I (Risk Disclosure Statements) of the Client Agreement. This Disclosure is provided in addition to, and without prejudice to, those provisions.
Unless otherwise defined herein, capitalised terms shall have the meanings ascribed to them in the Client Agreement.
Nature of Margin Trading
Margin trading involves entering into Transactions in Investment Products through a Margin Account, where all or part of the purchase price or exposure is financed by the Company or through arrangements with its Affiliates or Market Infrastructure Providers.
When you enter into a Transaction on margin, you are not required to pay the full value of the relevant Investment Products. Instead, you deposit an initial amount of equity, and the Company provides or facilitates financing for the remaining portion. The Investment Products acquired, together with any other Charged Assets in your Account, serve as collateral securing your obligations to the Company.
As the value of the relevant Investment Products fluctuates, the value of the collateral supporting such financing will also change. If the value of your Investment Products declines, the value of the collateral correspondingly decreases, and you may be required to provide additional funds or Charged Assets to maintain the required level of equity in your Margin Account. Conversely, increases in the value of your Investment Products may increase your equity; however, such increases do not reduce or extinguish your obligation to maintain margin in accordance with applicable requirements at all times.
In addition, certain Transactions (including, where applicable, short positions or derivative exposures) may require you to provide margin not as a partial payment for an asset, but as security for your obligations under such Transactions. In such cases, you may be required to deposit and maintain margin amounts that vary continuously based on market movements.
The Investment Products purchased on margin, together with any other Charged Assets, constitute collateral for your obligations. Where the value of such collateral becomes insufficient, the Company may take action (including liquidation or Close Out of Transactions or realisation of Charged Assets) to restore the required margin levels. Such action may be taken across any or all of your Accounts and shall not be limited to the specific Transaction that gave rise to the margin deficiency.
Suitability
Margin trading is highly speculative and is not suitable for all Clients. You should carefully assess your financial condition, risk tolerance, and investment objectives before engaging in margin trading. You should only engage in margin trading if you fully understand the risks involved and have sufficient financial resources to bear substantial losses. You must be capable of actively monitoring your Margin Account and responding immediately to margin requirements and market movements, including outside of standard market hours where applicable.
Losses May Exceed Your Charged Assets
You acknowledge and agree that losses incurred in a Margin Account may exceed the value of the Charged Assets held in such Account. Where the value of your Investment Products declines, the equity in your Margin Account may fall below the applicable margin requirements, resulting in a deficit. In such circumstances, you may be required to immediately provide additional funds or Charged Assets acceptable to the Company. If, following any liquidation or Close Out of your positions, there remains a shortfall, such shortfall shall constitute Liabilities owed by you to the Company. Notwithstanding anything to the contrary in the Client Agreement or otherwise, such Liabilities shall constitute a primary, unconditional and continuing payment obligation of the Client.
Margin Calls and Funding Risk
Where your Margin Account fails to satisfy applicable margin requirements, the Company may, but shall not be obliged to, issue a margin call. Any margin call must be satisfied strictly within the time specified by the Company, which may be immediate or very short. Funds or Digital Assets will only be recognised once actually received as cleared funds or assets in your Account, and any delay in transfer, settlement, blockchain confirmation or third-party processing shall be at your sole risk. For the avoidance of doubt, you shall have no right to request or obtain any extension of time to satisfy margin requirements, and the Company shall be under no obligation to grant any forbearance, waiver or indulgence in respect of any margin deficiency. Any timeframe specified in a margin call or otherwise by the Company is indicative only and shall not limit or restrict the Company’s rights, and the Company may, at any time and in its sole discretion, exercise its rights (including liquidation or Close Out) before the expiry of such timeframe. Notwithstanding anything to the contrary, the Company shall have no obligation to issue any margin call and may at any time exercise its rights (including liquidation or Close Out) without prior notice to you. You shall not rely on any such margin call being issued prior to the Company exercising its rights. The absence of a margin call shall not prejudice any rights of the Company, and you remain responsible for ensuring that your Margin Account satisfies all applicable requirements at all times.
Forced Liquidation Without Notice
The Company shall have the right, at its sole and absolute discretion and without prior notice, to liquidate, Close Out, unwind or otherwise terminate any or all Transactions, realise any Charged Assets, or take any action it deems necessary or desirable for risk management purposes. You acknowledge that you shall have no right to determine which Investment Products or positions are subject to liquidation, nor the timing, sequence or manner of such liquidation. All such decisions shall be made by the Company in its sole discretion, and any execution shall be effected at prevailing market prices, which may be significantly adverse. Notwithstanding anything to the contrary, the Company shall not be liable for any losses arising from the exercise of such rights.
Margin Requirements May Change at Any Time
The Company may, at any time and without prior notice, vary any margin requirements applicable to your Margin Account, including without limitation initial margin, maintenance margin, concentration limits, collateral eligibility and applicable haircuts. Such changes may take immediate effect and may apply to existing positions, and may result in your Margin Account becoming non-compliant even where there has been no change in your positions. You acknowledge that any failure to meet revised margin requirements may result in immediate liquidation or other enforcement action by the Company. Such changes may arise due to market volatility, liquidity constraints, concentration risk, changes imposed by Market Infrastructure Providers, or internal risk management considerations.
Intra-Day and Rapid Market Movement Risk
Margin sufficiency may be assessed on a real-time or intra-day basis. Rapid market movements may result in your Margin Account becoming under-margined within a very short period of time. In such circumstances, the Company may take immediate action, including liquidation or Close Out, without prior notice to you.
Financing, Interest and Cost Risk
In connection with margin trading, you will incur interest and/or fees on any financing provided. Such interest shall accrue on a daily basis and shall be payable by you in accordance with the Client Agreement. You acknowledge that applicable interest rates and fees may be varied by the Company at any time without prior notice, and that such costs will reduce any profits and increase any losses incurred by you.
Financing Availability Is Not Guaranteed
The availability of margin financing is not guaranteed and is subject to the Company’s sole discretion and prevailing market conditions. The Company may at any time refuse, reduce, suspend or terminate the provision of margin financing, or impose limits on your borrowing capacity, notwithstanding that your Margin Account contains sufficient Charged Assets. Such actions may arise due to liquidity constraints, limitations imposed by Market Infrastructure Providers, changes in market conditions, or internal risk management considerations.
Execution, Market and System Risk
You acknowledge that all Transactions are subject to market conditions and operational constraints. The Company does not guarantee the execution of any Instruction at any particular price or time. Execution may be delayed, fail, or occur at prices materially different from quoted prices due to volatility, illiquidity, system issues, connectivity failures or disruptions affecting any Exchange or Market Infrastructure Provider. In the event of liquidation or Close Out, execution may occur at significantly adverse prices, and it may not be possible to avoid losses or deficits. To the fullest extent permitted by applicable law, the Company shall not be liable for any losses, damages, costs or expenses incurred by you arising out of or in connection with any such delay, failure, rejection or adverse execution.
Market Infrastructure Risk
You acknowledge that your Transactions may be effected through Market Infrastructure Providers. Accordingly, your Margin Account may be affected by aggregated exposures, upstream margin requirements, and actions taken at a platform or intermediary level. The Company may be required to take action, including restricting positions or effecting liquidation, due to circumstances affecting other clients or its aggregate exposure.
Cross-Account, Collateral and Set-Off Risk
The Company may exercise rights of set-off, combination of accounts and realisation of Charged Assets in accordance with the Client Agreement. Accordingly, losses arising in respect of any Transaction or Margin Account may result in the application or realisation of assets held in other Accounts, including Digital Assets, and you may suffer losses across your entire relationship with the Company and its Affiliates.
Timing Mismatch and Gap Risk
You acknowledge that Digital Asset markets may operate on a continuous basis, whereas securities markets may operate only during specified trading hours. Accordingly, movements in the value of Digital Assets used as collateral may occur at times when it is not possible to effect Transactions in the relevant Investment Products, which may result in sudden margin deficiencies; and an increased likelihood of forced liquidation once the relevant markets reopen.
Digital Asset Collateral and Conversion Risk
Where Digital Assets are used as Charged Assets or are converted into fiat currency or other assets for the purpose of margin trading, you are exposed to additional risks. The value of Digital Assets may be highly volatile and may fluctuate significantly within short periods of time, including outside the trading hours of the relevant securities markets. As a result, the value of your collateral may decline rapidly, potentially triggering margin requirements or liquidation events. In addition, any conversion of Digital Assets into fiat currency or other assets for settlement, margin or liquidation purposes may be subject to price slippage; limited liquidity; and delays or disruptions in execution. You acknowledge that such conversions may be effected at prices determined by the Company in its discretion, acting in good faith, and that such prices may differ from market benchmarks.
Currency and Conversion Risk
Where your Margin Account involves multiple currencies (including fiat currencies and Digital Assets), you are exposed to foreign exchange and conversion risks. Fluctuations in exchange rates may affect the value of your Charged Assets; your margin requirements; and the amount of Liabilities owed by you. The Company may effect currency conversions at rates determined by it in accordance with the Client Agreement, and you shall bear all associated risks and costs.
Concentration and Correlation Risk
Where your Margin Account contains positions or Charged Assets that are concentrated in particular Investment Products, asset classes, or Digital Assets, you may be exposed to heightened risk. Adverse movements in correlated assets may result in rapid deterioration of your Margin Account, increasing the likelihood of margin calls or forced liquidation.
No Duty to Monitor or Advise
The Company does not undertake to monitor your Margin Account or your positions, nor does it provide any investment advice unless separately agreed. You are solely responsible for monitoring your Margin Account, maintaining sufficient margin at all times, and managing your exposure to risk.
Client Representation and Warranty
You represent and warrant to the Company, on a continuing basis, that:
you have sufficient knowledge, experience and understanding of financial markets, Investment Products, Digital Assets and margin trading to evaluate the risks involved;
you are capable of independently assessing and bearing the financial risks associated with margin trading, including the risk of losses exceeding your initial investment;
you have sufficient financial resources to meet your obligations under the Client Agreement, including any margin requirements and Liabilities;
you have made your own independent decision to engage in margin trading and are not relying on the Company or any of its Affiliates for any investment, legal, tax or other advice; and
you will monitor your Margin Account on an ongoing basis and take all necessary steps to manage your risk exposure.
Special Risks of Short Selling
Short selling involves selling Investment Products that you do not own at the time of sale, with the intention of purchasing them at a later date to close the position. This strategy involves substantial and unique risks that differ from, and may be in addition to, the general risks of margin trading described above. Short selling is not suitable for all clients. You should ensure that you fully understand the risks described below before engaging in any short selling activity.
Unlimited Loss Risk. Unlike a long position in an Investment Product, where the maximum loss is limited to the amount invested, a short position carries theoretically unlimited loss potential. There is no ceiling on the price to which a stock may rise, and accordingly no ceiling on the amount you may be required to pay to close a short position. You may be required to purchase shares at a price significantly higher than your original short sale price, resulting in losses that substantially exceed your initial investment and the value of any Charged Assets held in your Account. You acknowledge and accept this risk as an inherent feature of short selling.
Short Selling Margin Requirements. Short selling may only be conducted through a Margin Account and is subject to initial and maintenance margin requirements specific to short positions. These requirements are separate from, and may be in addition to, any margin requirements applicable to your long positions. As the price of a shorted Investment Product rises, the margin required to support the short position will increase correspondingly. If your Margin Account does not maintain the required level of margin at any time, the Company may, without prior notice, close out your short position by purchasing the relevant shares at the prevailing market price. You are solely responsible for any losses or costs arising from such a close-out, including any difference between the prevailing purchase price and your original short sale price.
Stock Borrowing Costs and Variability. To open and maintain a short position, it is necessary to borrow the relevant Investment Products from a securities lender. You will be required to pay borrowing fees and associated costs for as long as the short position remains open. Such fees are distinct from, and in addition to, any financing interest applicable to your Margin Account. Borrowing costs are determined by reference to prevailing securities lending market conditions and the availability of the relevant Investment Products for loan, and may be highly variable. In particular, borrowing fees for Investment Products that are in high demand or limited supply (commonly referred to as “hard-to-borrow” securities) may be substantially higher and may increase significantly and without notice. The Company does not guarantee the availability or cost of borrowing any particular Investment Product, and all borrowing costs are for your account.
Stock Recall and Compulsory Buy-In. Securities lenders retain the right to recall borrowed shares at any time and without prior notice. If the Company receives a recall notice and is unable to re-borrow the relevant Investment Products from an alternative lender in sufficient time, the Company shall be entitled to purchase the relevant Investment Products on your behalf without prior notice to you in order to close the short position (a “buy-in”). Any such buy-in will be effected at the then-prevailing market price, which may be significantly higher than your original short sale price. You shall be liable for all losses, costs and expenses incurred in connection with any buy-in, including any difference between the buy-in price and the short sale price, and any commissions, fees or other charges arising from the purchase. The Company shall have no liability to you for any losses arising from a buy-in carried out in these circumstances.
Dividend and Corporate Action Liability. As the holder of a short position, you are required to reimburse the securities lender for any dividends, distributions or other entitlements paid in respect of the borrowed Investment Products during the period in which the short position is open. Such payments are made to the lender in lieu of the dividends or distributions they would otherwise have received. You may also be subject to equivalent obligations arising from other corporate actions, including rights issues, stock splits or other capital events affecting the borrowed Investment Products. Where a dividend or other payment obligation has been incurred in respect of your short position and you subsequently close the short position prior to the actual settlement date of that payment, you must ensure that your Account maintains sufficient available cash or Charged Assets to satisfy the outstanding payment obligation when it falls due. Failure to do so may result in the Company taking action in accordance with the Client Agreement to recover such amounts, including by realising your Charged Assets.
Acknowledgement
By accessing or using margin trading services, you acknowledge and agree that you have read and understood this Disclosure, that you are capable of bearing substantial losses (including losses exceeding your initial investment), and that you accept all risks associated with margin trading.