PRODUCT DISCLOSURE STATEMENT
Futures Contracts and Futures Option Contracts
PRODUCT DISCLOSURE STATEMENT
FUTURES
CONTRACTS AND
FUTURES OPTION
CONTRACTS
Halifax Investment Services Limited
Australian Financial Services Licence No. 225973
Date 18th September 2015
HALIFAX Product Disclosure Statement 1
PRODUCT DISCLOSURE STATEMENT
IMPORTANT INFORMATION AND DISCLAIMER
In preparing this Product Disclosure Statement (“PDS”), we have not considered your personal circumstances.
This document only provides a summary of the significant features and risks of Futures Contracts and Futures
Option Contracts.
Before trading in Futures Contracts and Futures Option Contracts, you need to be satisfied that these financial
products are appropriate to your financial objectives, situation and needs.
Halifax Investment Services Ltd strongly recommends that before opening an account and beginning to trade
that you read this PDS in its entirety and that you understand it. It is your responsibility to ensure that you fully
understand the products, how they are traded and the risks involved.
Halifax also recommends that you consider seeking financial, legal, taxation and other professional advice to
ensure that you fully understand Futures Contracts and Futures Option Contracts and that they are appropriate
for you before you begin trading in these products.
To the extent permitted by law, neither Halifax nor its affiliates accepts any responsibility for errors or
misstatements, negligent or otherwise, nor for any direct, indirect, consequential or other loss arising from any
use of these documents and/or further communication in relation to them.
DO YOU HAVE ALL THE RELEVANT DOCUMENTS?
This PDS is subject to the detailed provisions of the Client Services Agreement and Financial Services Guide
(“FSG”). You must ensure you have read and fully understand the Client Services Agreement, the FSG and
this PDS.
2HALIFAX Product Disclosure Statement
Futures Contracts and Futures Option Contracts
Decisions to enter into transactions involving Futures Contracts and Futures Option Contracts are very
important. They often have significant risks and consequences. Refer to section 11 for more information about
significant risks in trading Futures Contracts and Futures Option Contracts.
PRODUCT DISCLOSURE STATEMENT
Index
1.Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2. Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . 4
Futures Contracts and Futures Option Contracts
3. The Purpose of this PDS . . . . . . . . . . . . . . . . . . . . 4
4. Changes to this PDS . . . . . . . . . . . . . . . . . . . . . . . 5
5. The Financial Products this PDS Covers . . . . . . . . 5
6. About Halifax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
7. Purpose of Futures Contracts and
Futures Option Contracts . . . . . . . . . . . . . . . . . . . . 6
8. Key Features of Futures Contracts . . . . . . . . . . . . 6
9. Key Features of Futures Option Contracts . . . . . . 10
10.Key Benefits of Trading in Futures Contracts
and Futures Option Contracts . . . . . . . . . . . . . . . 12
11. Significant Risks . . . . . . . . . . . . . . . . . . . . . . . . . . 13
12. Margin Obligations . . . . . . . . . . . . . . . . . . . . . . . . 18
13. Opening and Closing Out a Futures or
Futures Option Position . . . . . . . . . . . . . . . . . . . . 21
14. Electronic Trading Platforms . . . . . . . . . . . . . . . . 22
15. Trading Hours . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
16. Trading Examples . . . . . . . . . . . . . . . . . . . . . . . . . 23
17. How we deal with your money . . . . . . . . . . . . . . . 23
18. Charges, fees and other amounts payable . . . . . 23
19. Confirmation of Transactions . . . . . . . . . . . . . . . . 26
20. Market Information . . . . . . . . . . . . . . . . . . . . . . . . 27
21. Cooling Off Arrangements . . . . . . . . . . . . . . . . . . 28
22. Taxation Implications . . . . . . . . . . . . . . . . . . . . . . 28
23. Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . 28
24.Privacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
25. Glossary of Terms . . . . . . . . . . . . . . . . . . . . . . . . 29
Annexure A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Schedule A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Schedule B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Schedule C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Schedule D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Schedule E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
HALIFAX Product Disclosure Statement 3
1. Introduction
This PDS is dated 28th July 2014 and is issued by
Halifax Investment Services Ltd (“Halifax”). Halifax
is an unlisted Australian public company (ABN 52
096 980 522), an Australian Stock Exchange (ASX)
market participant that holds an Australian financial
services licence issued by the Australian Securities
and Investments Commission (“ASIC”) (AFS Licence
number 225973).
Under the Corporations Act 2001 (Cth) (“Corporations
Act”), Halifax is regarded as the issuer of financial
products which are derivatives. This PDS has been
prepared by Halifax as the issuer of Futures Contracts
(“Futures”) and Futures Option Contracts (“Futures
Options”) products referred to in this PDS. Futures
and Futures Options products are exchange traded
derivative products.
The information in this PDS is general information only
and does not take into account your personal objectives,
financial situation and needs. We also refer you to the
detailed provisions of the Client Services Agreement
and the FSG. Before making a decision to acquire the
financial products described in this PDS you should
read this PDS, the FSG and Client Services Agreement
and be satisfied that any trading you undertake in
relation to those Futures Contract and Futures Options
Contract is appropriate in view of your objectives,
financial situation and needs. You can access the FSG
and the Client Services Agreement from our website or,
by calling Halifax and requesting that a paper copy be
provided to you free of charge.
See the glossary of terms in section 25 for definitions
we use in this PDS.
2. Terms and Conditions
This PDS and the FSG set out important information
about the financial products and services Halifax offers
and about Halifax itself. Additional legal terms governing
your dealing with us are set out in:
• your Client Services Agreement with us;
• any supplementary terms for particular financial
products such as the terms for Futures Contracts and
Options Contracts which are generally set out in the
operating rules of the relevant Futures Exchange;
• the ASIC Market Integrity Rules (where applicable);
• any supplementary terms for any electronic Trading
Platform which you use.
You should refer to the website of the relevant
Futures Exchange for information, details of contracts
available for trading, contract specifications, operating
rules, pricing information and clearing arrangements
applicable to that Futures Exchange. If you are unable
to access the relevant website, please contact us and
we will endeavour to make the information available to
you through other means.
4HALIFAX Product Disclosure Statement
You will need to enter into a Client Services Agreement
by completing the application form. The Client Services
Agreement sets out the general legal terms of your
dealings with us for the products covered by this PDS
and also for dealings not covered by this PDS (such
as trading in other financial products we offer). By
completing an application form you agree to the terms
of the Client Services Agreement.
3. The Purpose of this PDS
Under the Corporations Act, a retail client must receive
a PDS before acquiring a financial product. The PDS
is the document that sets out the significant features of
a financial product, including its risks, benefits, costs
and fees and other related information. The purpose of
this PDS is to provide you with sufficient information to
make an informed decision in relation to the acquisition
of our financial products. You may also use this PDS to
compare the financial products described with similar
financial products offered by other issuers i.e. other
Futures and Futures Options providers.
This PDS seeks to explain to you about our products
in a clear, concise and effective manner. When we
use the terms “Halifax”, “we”, “our” or “us” in this PDS,
the reference is to Halifax, the issuer of the Futures
and Futures Option products. When we use the term
“you” we mean you as the applicant for or holder of our
Futures and Futures Option products. When we refer to
“client” we mean you or another applicant for or holder
our Futures and Futures Option products.
This PDS is an important document and provides you
with key information about our Futures and Futures
Option products.
Futures Contracts and Futures Option Contracts
can be highly leveraged and speculative with a
high degree of risk. Potential investors should
understand the risks of investing in Futures
Contracts and Futures Options Contracts before
making any decision to invest.
Before trading in the Futures and Futures Option
products referred to in this PDS you should give
consideration to your objectives, financial situation and
needs. We recommend that you take all reasonable
steps to fully understand the possible outcomes of
trades and strategies in relation to the Futures and
Futures Option products offered. You should also be
aware of the risks involved and be satisfied that trading
in these products is suitable for you in view of your
financial circumstances.
If you have any questions in relation to this PDS, please
do not hesitate to contact us (our contact details are in
section 6 of this PDS).
We are required to give you this PDS because we are
the issuer of the financial products described in this
PDS.
Futures Contracts and Futures Option Contracts
PRODUCT DISCLOSURE STATEMENT
PRODUCT DISCLOSURE STATEMENT
Other Jurisdictions
Futures Contracts and Futures Option Contracts
The offer to which this PDS relates is available only to
persons receiving the PDS in Australia.
The distribution of this PDS in jurisdictions outside
Australia may be subject to legal restrictions. Any
person who resides outside Australia who gains access
to this PDS should comply with any such restrictions
as failure to do so may constitute a violation of financial
services laws. The offer to which this PDS relates is not
available to US investors.
The Application of this PDS
This PDS relates to Futures and Futures Option
Accounts opened after the date of this PDS. If you are
one of our pre-existing clients and you have entered
into a Client Services Agreement before the date of this
PDS, your Futures Transactions and Futures Option
Transactions will continue to be governed by your
existing Client Services Agreement and the PDS under
which you invested. You can elect to transition to the
terms of the Futures and Futures Options under this
PDS by contacting us and agreeing to vary the terms of
your Client Services Agreement.
4. Changes to this PDS
This PDS replaces all previous versions and is current
at the time it was prepared, but is subject to change
from time to time and may be updated on our website
www.halifax.com.au. A copy can be downloaded
from our website or, by calling us and requesting that
a paper copy be provided to you free of charge. If any
new information is materially adverse information,
we will issue a new or supplementary PDS with
the new information. If the new information is not
materially adverse, we may not issue a new PDS or
Supplementary PDS but you will be able to find the
updated information on our website at www.halifax.
com.au or by contacting us. Our contact details are set
out in section 6 of this PDS.
Option contracts traded over Futures Contracts are
commonly known as Futures Option Contracts. From
the buyer’s viewpoint, a Futures Option Contract that
is a “Call Option” gives the buyer the right, but not the
obligation, to buy a Futures Contract at the prescribed
Exercise Price (or Strike Price) in return for payment
of a Premium. From the buyer’s viewpoint, a Futures
Option Contract that is a “Put Option” gives the buyer
the right, but not the obligation, to sell a Futures
Contract at the prescribed Exercise Price (or Strike
Price) in return for payment of a Premium. From the
seller’s viewpoint, the seller has no right other than
a right to the Premium. The seller will be under an
obligation to sell a Futures Contract (in the case of a
Call Option) or to buy a Futures Contract (in the case
of a Put Option) at the Exercise Price of the Futures
Option Contract if the Futures Option Contract is validly
exercised by the buyer. If a Futures Option is exercised,
it results in the establishment of a Futures Contract.
Futures Contracts and Futures Option Contracts can be
either deliverable or cash settled (see section 8.2 below
for further information). However, it is Halifax’s policy
not to permit its clients to make or take delivery. If you
wish us to vary our policy, and you specifically wish to
make or take delivery you must obtain our prior written
consent (see section 8.12 below for further information).
Halifax deals in Futures Contracts and Futures Option
Contracts traded on a number of Futures Exchanges,
including ASX 24, the Chicago Board of Trade, the New
York Board of Trade and the Intercontinental Exchange.
For Futures Contracts and Futures Option Contracts
traded on offshore exchanges, we engage a participant
of the relevant local exchange to execute and clear
transactions on your behalf. We refer you to our website
(www.halifax.com.au) which contains a list of the
various Futures Exchanges on which Halifax will accept
orders from clients to trade together with links to the
website of each Futures Exchange.
We offer Futures and Futures Option products on:
(i)Exchange traded Futures Contracts (“Futures”) –
refer section 8 for additional details; and
5. The Financial Products
this PDS Covers
(ii)Exchange traded Futures Option Contracts
(“Futures Options”) – refer section 9 for additional
details.
This is a PDS for Futures and Futures Option products
offered by us. These are exchange traded derivative
contracts.
This PDS does not cover derivatives traded as over the
counter (“OTC”) products (also known as off-market
derivatives).
A Futures Contract is a standardised agreement, traded
on a Futures Exchange, to either buy or to sell a specific
quantity of a specific product (“Underlying Instrument”)
for settlement on a specified date. The Underlying
Instrument may be an asset, security (such as a stock),
index, reference rate, commodity, currency or other type
of financial product.
Further documents and publications concerning Futures
Contracts and Futures Option Contracts can be found
on the ASX website (www.asx.com.au) in the Education
and Resources section. If you cannot access the
website, please contact us so we can provide you with a
copy of the information to you.
HALIFAX Product Disclosure Statement 5
PRODUCT DISCLOSURE STATEMENT
Halifax acts as agent and broker on your behalf when
you trade in Futures and Futures Options. We are the
issuer of this PDS and the issuer of the Futures and
Futures Option products referred to in this PDS. In
accordance with our AFS Licence, we are authorised
by ASIC to advise, deal and make a market to both
retail and wholesale clients in derivatives. Futures and
Futures Option products are derivatives. Pursuant to
our AFS Licence, among other things, we are also
authorised to provide general and/or personal financial
product advice in relation to, and to deal in, the following
products for both retail and wholesale clients:
(i) deposit and payment products limited to basic
deposits;
(ii) interests in managed investment schemes
excluding investor directed portfolio services;
(iii) foreign exchange contracts (and make a market);
(iv) securities; and
(v) miscellaneous financial investment products (limited
to managed investment warrants).
All enquiries to us should be made during business
hours to the Operations Manager. Our contact
details are:
Contact Details:
The Operations Manager
Halifax Investment Services Ltd
Governor Phillip Tower
Level 49, 1 Farrer Place
Sydney, NSW 2000
Ph: 1300 363 505
Facsimile: 61 2 9241 4331
Email: [email protected]
Website: www.halifax.com.au
7. Purpose of Futures
Contract and Futures
Option Contracts
Futures and Futures Option products are generally used
for one of two purposes – hedging or speculating.
Futures and Futures Options can provide those who
deal in the Underlying Instrument with a facility for
managing the risks associated with changing prices for
those investments. This strategy is known as hedging.
Futures and Futures Options are also traded by
speculators, who trade in the anticipation of profiting
purely from changing prices in the Underlying
Instrument.
Trading in Futures and Futures Options does however,
involve significant risk. Transactions should only be
entered into by traders and investors who understand
the nature and extent of their rights, obligations and
risks (for more information on risks see section 11 of this
PDS).
6HALIFAX Product Disclosure Statement
8. Key Features of Futures
8.1. What is a Futures Contract?
We refer to section 5 of this PDS for an explanation of
what a Futures Contract is.
8.2. Types of Futures Contracts
There are two main types of Futures Contracts.
These are:
• Deliverable Futures Contracts – where the seller
agrees to deliver to the buyer and the buyer agrees
to take delivery of, the specific quantity of the
Underlying Instrument (such as a commodity) at the
time the Futures Contract expires for the agreed
price.
• Cash settled Futures Contracts – where the two
parties make a cash adjustment between themselves
at the time the Futures Contract expires according to
whether the price of the Underlying Instrument (such
as a commodity, financial instrument or index) has
risen or fallen since the time the arrangement was
made.
A Futures Contract’s terms are generally set out in
the operating rules of the relevant Futures Exchange
on which the contract was made, which might be
in Australia or overseas. There may, however, be
differences in procedures and regulation of markets
from one country to another and one Futures Exchange
to another.
Futures Contracts are subject to Margin Requirements
and marked to market at any given time (for more
information see section 12 of this PDS).
8.3. Quotes
A Futures quote represents the bid/ask spread for the
Futures Contract. For example, if the Futures Contract is
quoted as “1340.20/1340.30” this means that you can:
(a) “buy” the Futures (i.e. enter into “long” Futures
Contract) at 1340.30; and/or
(b) “sell” the Futures (i.e. enter into a “short” Futures) at
1340.20.
There may be a number of additional costs incurred
when Futures are entered into or Closed Out, as
described in section 18 and Schedule A-B.
Futures Contracts and Futures Option Contracts
6. About Halifax
Futures Contracts and Futures Option Contracts
PRODUCT DISCLOSURE STATEMENT
8.4. You can take both long
and short positions
Example 1:
You can take both “long” and “short” Futures positions.
If you take a long position (i.e. you “purchase” a Futures
Contract), you may profit from a rise in the price of the
Underlying Instrument, and you will make a loss if the
price of the Underlying Instrument falls. Conversely,
if you take a short position (i.e. you “sell” a Futures
Contract), you may profit from a fall in the price of the
Underlying Instrument, and you will make a loss if the
Underlying Instrument’s price rises.
• you purchase 1 SPI200 ® Futures Contract (i.e. you
enter into a “long” Futures Contract) where the
Underlying Instrument is the ASX200 ® Index and the
level at which you enter into the Futures Contract is
5450; and
Assume:
• you later Closed Out the Futures Contract by “selling”
(or entering into a “short” Futures Contract) at a
higher level of 5475.
See sections 12 and 13 for further information in relation
to Margin Requirements and Schedule E.
The resulting gross profit on the transaction would be
$625 being sale level (5475) less buy level (5450) x 1 x
25 (the dollar amount per point of the Futures Contract).
8.5. Calculating profits
and/or losses
The net profit is determined after deducting Halifax
commissions (charged on both opening and Closing Out
the transaction) and any other charges.
If you Close Out a Futures Transaction before the Expiry
Date or the First Notice Day (as will usually be the
case), the amount of any gross profit or loss made on a
Futures Transaction (i.e. before fees, commissions and
other costs) will be equal to the difference between the
price or level of the Futures Contract when the Futures
Contract is opened and the price or level of the Futures
Contract when the Futures Contract is Closed Out,
multiplied by the number of the Futures Contracts held.
If a Futures Transaction remains open prior to the
Expiry Date or the First Notice Day, the amount of any
gross profit or loss made on a Futures Transaction
(i.e. before fees, commissions and other costs) will be
equal to the difference between the price of the Futures
Contract when the Futures Contract is opened and
the price of the Futures Contract on the date of expiry
or termination, multiplied by the number of Futures
Contracts held.
The indicative price or level for a Futures Contract at
which you can enter into or Close Out is available on
your online Trading Platform.
The calculation of profit or loss is also affected by other
adjustments, including relating:
• commissions deducted from your Account (including
GST on such amounts, where applicable);
• FX spreads applied in respect of Futures
Transactions denominated in a currency other than
the currency in which your Account is denominated;
and/or
• any other costs or charges applied to your Account.
For more information on costs and charges see section
18 of this PDS and the tables in Schedules A-B.
Example 2:
Assume:
• you purchase 1 SPI200 ® Futures Contract (i.e. you
enter into a “long” Futures Contract) where the
Underlying Instrument is the ASX200 ® Index and the
level at which you enter into the Futures Contract is
5450; and
• you later Closed Out the Futures Contract by “selling”
(or entering into a “short” Futures Contract) at a lower
level of 5440.
The resulting gross loss would be $250 being sale level
(5440) less buy level (5450) x 1 x 25 (the dollar amount
per point of Futures Contract).
The net loss is determined after adding commissions
and any other charges.
8.6. Realised and unrealised
profits and losses
Profits and/or losses are realised if both the buy and the
sell side of the transaction have been completed and
have been matched against each other or Closed Out.
Profits and/or losses are unrealised if only one side of
the Transaction has reached completion (i.e. it remains
an open position) and will only be realised when the
other side of the Transaction has reached completion.
If you do not instruct us (through your Trading Platform)
to match selected trades against previous opposite
trades then your Trading Platform will default to
matching trades on a First In First Out (“FIFO”) basis.
Please contact one of our representatives to assist you
in understanding the importance of and how to match
and close out trades.
HALIFAX Product Disclosure Statement 7
8.7. Futures are standardised
Futures are standardised and interchangeable, meaning
that Futures Contracts of a particular class are perfect
substitutes of each other. A consequence of contract
standardisation is that the price is the only factor that
remains to be determined in the marketplace (outside
of the contract month and volume). On the ASX 24,
Futures are quoted and traded on an electronic trading
platform (SYCOM ®), which provides a system of
continuous price discovery. This means that the price
at which trades take place may continually change
throughout a trading session. These features are
common through most international Futures Exchanges.
Since all Futures contracts for a given Futures month
in the same market are interchangeable, they can be
Closed Out against an opposite position in the same
contract. A client who has bought a particular Futures
contract can cancel the Transaction by selling or
Closing Out the same particular Futures Contract. The
net result is that the trader no longer holds a position in
the Futures Contract. Similarly, a client who has sold a
given Futures contract can cancel the position or Close
Out by buying the same contract.
8.8. Duration of Futures
Futures contracts may be made for periods of
up to several years in the future. As part of the
standardisation of Futures Contracts is that the
contract Expiry Dates follow a predetermined cycle
(standardisation is discussed in section 8.7 above). For
example, in the SPI 200 ® Futures Contract traded on
the ASX 24, these can be made for settlement only in
March, June, September or December, but for up to 18
months from the time of the trade.
8.9. The role of the
Clearing House
Futures Exchanges generally have a Clearing House.
Clearing Houses clear and settle Futures Contracts
executed on the Futures Exchange. The primary role
of the Clearing House is to guarantee the settlement
of obligations arising under the Futures Contracts
registered with it. This means that when your broker
(such as Halifax) buys or sells a Futures Contract on
your behalf, neither you nor your broker needs to be
concerned with the creditworthiness of the broker taking
the other side of the contract. See below for further
discussion on the novation process that occurs at the
Clearing House.
8HALIFAX Product Disclosure Statement
The following paragraphs refer only to trades executed
through ASX 24. Different rules may apply for offshore
exchanges. If you wish to trade Futures Contracts on
an offshore exchange, you should carefully consider
the rules of the relevant offshore exchange. The ASX
24’s Clearing House is ASX Clear (Futures) Pty Ltd.
The ASX’s Clearing House is ASX Clear Pty Ltd (ASX
Clear).
The Clearing House will never deal directly with you,
rather the Clearing House will only ever deal with its
Clearing Participants – that is your broker (where your
broker is a Clearing Participant), or where your broker is
not a Clearing Participant (as is the case with Halifax),
your broker’s Clearing Participant.
When a Futures Contract is registered with the Clearing
House, it is novated. This means that the Futures
Contract between the two brokers who made the trade
is replaced by one contract between the buying broker
(or its Clearing Participant) and the Clearing House as
seller and one contract between the selling broker (or its
Clearing Participant) and the Clearing House as buyer.
In simple terms, the Clearing House becomes the buyer
to the selling broker, and the seller to the buying broker.
You, as the client, are not party to either of those
Futures Contracts. Although Halifax (as your broker)
may act on your instructions or for your benefit, the rules
of the Clearing House provide that any contract arising
from an order submitted to the market is regarded as
having been entered into by the executing broker as
principal. Upon registration of the contract with the
Clearing House in the relevant Clearing Participant’s
name, that Clearing Participant will incur obligations to
the Clearing House as principal, even though the trade
was entered into on your instructions.
The Clearing House ensures that it is able to meet its
obligation to Clearing Participants by calling margin
to cover any unrealised losses in the market (for more
information on Margin Requirements see section 12 of
this PDS).
Generally your Futures Contracts (and those of our
other clients) will be held separately from Futures
Contracts entered into by us on our own account.
If we were to default on our obligations to our Clearing
Participant in respect of our own Futures Contracts,
your Futures Contracts will not be used to meet our
default. Rather, the Clearing Participant will either Close
Out your open positions or attempt to transfer them to
another Clearing Participant.
Futures Contracts and Futures Option Contracts
PRODUCT DISCLOSURE STATEMENT
PRODUCT DISCLOSURE STATEMENT
Futures Contracts and Futures Option Contracts
8.10. Closing Out
Due to the system of registration and novation referred
to above in sections 8.7, 8.8 and 8.9, Closing Out can
be achieved without going back to the original party
with whom the Futures Contract was traded. This
is a significant benefit of exchange traded products
compared to OTC products.
When an existing buyer sells to Close Out their open
position, the sale transaction is registered with the
Clearing House in the manner described above. For
example, if trader A was to sell to trader B at $100
per unit, the Clearing House would become the buyer
to trader A and the seller to trader B. If trader B sells
to trader C for $120 per unit, the Clearing House is
now novated as the buyer to trader B and the seller
to trader C. Trader A would therefore have an open
sold position and trader C would have an open bought
position. Trader B no longer has a position and has
therefore realised a profit of $20 per unit (ignoring any
transaction fees).
For example, a Futures Contract where the underlying
Instrument is gold, each Futures Contract traded on the
New York Mercantile Exchange will be for 100 ounces.
Thus, if you buy a gold Futures Contract at a price of US
$1,300 it will have a value of US $130,000 (i.e. 100 x US
$1,300). If the price of gold increases to US $1,350, it
will have a value of US $135,000 and thus, if you were
to Close Out that Futures Contract you would realise a
gross profit of US $5,000. Any commissions, fees and
charges (as well as applicable taxes) would still need to
be deducted to calculate your actual profit.
8.12. Settlement
If you have bought a Deliverable Futures Contract that is
still open at the close of trading on the last day of trading
or First Notice Day (FND) (whichever comes first) in
respect of that Futures Contract, you will be under an
obligation to take delivery of and pay the contract price
in full for the Underlying Instrument described in the
Futures Contract.
The Futures Contracts which trader B held (one to buy
and one to sell) have been settled in cash between
trader B and the Clearing House. Trader B simply
receives the net profit. Any profit due to trader B is paid
out by the Clearing House in cash, even though the
original seller (trader A) remains in the market.
If you have sold a Deliverable Futures Contract that
is still open at the close of trading on the last day of
trading or the First Notice Day (whichever comes first)
in respect of that Futures Contract, you will be under
an obligation to deliver the Underlying Instrument
described in that Futures Contract.
In addition, we have the ability to amend or cancel
a trade as stated in our Client Services Agreement.
The Futures Exchange or Clearing House may have a
similar right under the relevant market rules. This could
cause a loss or increased loss to be suffered.
It is Halifax’s policy not to permit its clients to make or
take delivery under a Deliverable Futures Contract.
If you wish us to vary our policy, and you specifically
wish to make or take delivery you must obtain our prior
written consent. It is your responsibility to monitor your
open positions as the Deliverable Futures Contract
approaches Settlement Date or First Notice Day
(whichever comes first) and to Close Out any open
position before the appropriate date. Halifax reserves
the right, in its absolute discretion, to Close Out any
open position you hold in a Deliverable Futures Contract
if you have not Closed Out that Futures Contract.
Any unilateral Close Out by a Clearing House, Futures
Exchange or its regulator in accordance with the rules,
regulations, customs and usages of the market will
be accepted by you and settled based on that Close
Out and you will accept any costs involved in the reestablishment of a position if you re-open the position.
8.11. Valuation of Futures
Contracts
The Underlying Instrument of a Futures Contract is
set out in the operating rules of the relevant Futures
Exchange. As Futures Contracts are standardised (refer
to section 8.7), the quantity of the Underlying Instrument
for a particular series of Futures Contracts will always
be the same.
If you have a cash-settled Futures Contract open at the
close of trading on the last day of trading or First Notice
Day (whichever comes first) in respect of the relevant
Futures Contract, you will be under an obligation to pay
(for a bought position) or have a right to receive (for a
sold position) an amount of money depending on the
price movement.
If Clients require any assistance or clarification
regarding the expiry of Futures Contracts, please
contact Halifax for further information.
HALIFAX Product Disclosure Statement 9
PRODUCT DISCLOSURE STATEMENT
Futures Option Contracts are distinguished from
options over equities which are traditionally traded
on Stock Exchanges. Several features referred to in
section 8 of this PDS with respect to the key features of
Futures Contracts are also applicable to Futures Option
Contracts and these are not repeated here. We refer to
sections 8.7, 8.8 and 8.9.
The following information is included to explain the
specific nature of a Futures Option Contract and the
obligations assumed by a person who enters into a
Futures Option Contract.
9.1. What is a Futures Option
Contract?
We refer to section 5 of this PDS for an explanation of
what a Futures Option Contract is.
9.2. Styles of Options
There are two types of option styles known as
American-style and European-style.
European Options can only be exercised on the
Expiry Date and not before. American Options can be
exercised at any day up until and including the Expiry
Date. Futures Option Contracts traded on ASX 24 are
American Style Options and may be exercised at any
time before the Expiry Date. As noted, because ASX 24
Futures Option Contracts can be exercised at any time
before the Expiry Date, the seller of a Futures Option
Contract must be prepared for that Futures Option
Contract to be exercised any time before the Expiry
Date.
You should clarify whether the Futures Option Contract
you intend to trade is an American Futures Option
or a European Futures Option prior to entering into
the transaction as the operating rules of the relevant
Futures Exchange you are trading on may differ
according to the Futures Option Contract in which you
are dealing.
9.3. Types of Futures Option
Contracts
There are two types of Futures Option Contracts – Call
Options and Put Options.
A Call Futures Option gives the buyer the right, but
not the obligation, to buy a specified quantity of the
Underlying Instrument at the Exercise Price at (in the
case of a European Futures Option) or before (in the
case of American Futures Option) the Expiry Date of the
Futures Option. The seller of a Call Futures Option has
the obligation to provide the Underlying Instrument if the
Futures Option Contract is exercised by the buyer.
A Put Futures Option gives the buyer the right, but not
the obligation, to sell (in the same market) a specified
quantity of the Underlying Instrument at the Exercise
Price at (in the case of a European Futures Option)
or before (in the case of American Futures Option)
the Expiry Date of the Futures Option. The seller of
a Put Futures Option has the obligation to purchase
the Underlying Instrument if the Put Futures Option is
exercised by the buyer. Each Put Futures Option or Call
Futures Option has a buyer and a seller.
9.4. Exercising Call Options and Put Options
The diagram below sets out the results from the buyer’s and seller’s viewpoint when the buyer exercises a Call Futures
Option or Put Futures Option that relates to a Futures Contract:
Buyer of Futures Option
Seller of Futures Option
Bought Call Futures Option ->
Bought Futures Contract
(at the Exercise Price of
the option)
Sold Call Futures Option ->
Sold Futures Contract
(at the Exercise Price of
the option)
Bought Put Futures Option ->
Sold Futures Contract
(at the Exercise Price
of the Futures Option
Contract)
Sold Put Futures Option ->
Bought Futures Contract
(at the Exercise Price
of the Futures Option
Contract)
10HALIFAX Product Disclosure Statement
Futures Contracts and Futures Option Contracts
9. Key Features of Futures
Option Contracts
PRODUCT DISCLOSURE STATEMENT
9.5. “In-the-money”,
“at-the-money” and
“out-of-the-money”
Futures Contracts and Futures Option Contracts
A Futures Option Contract is always either “in-themoney”; “out-of-the-money” or “at-the-money”.
An in-the-money option is, in relation to a bought Call
Futures Option, if the Strike Price is lower than the
current market price level of the Underlying Instrument
and, in relation to a bought Put Futures Option, if the
Strike Price is above the market price level of the
Underlying Instrument. An in-the-money option is,
in relation to a sold Call Futures Option, if the Strike
Price is higher than the current market price level of
the Underlying Instrument and, in relation to a sold Put
Futures Option, if the Strike Price is below the market
price level of the Underlying Instrument.
An out-of-the-money option is, in relation to a bought
Call Futures Option, if the Strike Price is higher than the
current market price level of the Underlying Instrument
and, in relation to a bought Put Futures Option, if the
Strike Price is below the market price level of the
Underlying Instrument. An out-of-the-money option is,
in relation to a sold Call Futures Option, if the Strike
Price is lower than the current market price level of the
Underlying Instrument and, in relation to a sold Put
Futures Option, if the Strike Price is above the market
price level of the Underlying Instrument.
An at-the-money option is, in relation to both Put
Options and Call Options, if the Strike Price is equal
to the current market price level of the Underlying
Instrument.
If a Futures Option Contract is out-of-the-money at a
particular point in time, it does not mean it does not
have value. That is, it may still have time value i.e. time
until the Expiry Date in which the price of the Underlying
Instrument may move in your favour.
On ASX 24, all in-the-money or at-the-money options
are automatically exercised by the Clearing House. Not
all exchanges automatically exercise in-the-money or
at-the-money options at expiry. You should contact your
Halifax representative before the Expiry Date or the
option may lapse worthless.
9.6. How is the Premium
determined?
The price to be paid or received in relation to a Futures
Option Contract is the Premium. It is negotiated
between the buyer and seller of the Futures Option
Contract via the market, and is payable by the buyer to
the seller (through the Clearing House) at the time the
Futures Option Contract is entered into. The Premium
is the compensation for the seller accepting the risk
involved in selling the Futures Option Contract. The
full value of the Premium is payable immediately upon
executing the Futures Option Contract. This means
that sufficient cleared funds must be deposited in your
Account with Halifax before you can trade.
Paying the Premium will allow you to keep or hold the
Futures Option Contract until its Maturity Date (when
it can either be exercised or it will lapse) or to sell it
at any given point of time prior to its Maturity Date
i.e. Close Out the open Futures Option Contract. The
value of a Futures Option will fluctuate during the life of
the Futures Option depending on a number of factors,
including:
A client contemplating purchasing a deep out-of-themoney option (i.e. a Futures Option with a Strike Price
significantly above, in the case of a Call Futures Option,
or significantly below, in the case of a Put Futures
Option, the current price) should be aware that the
chance of such an Futures Option Contract becoming
profitable is generally remote.
(iii) the nominated Exercise Price;
You should also note that:
(iv) the volatility of the Underlying Instrument; and
(1) When you buy a Futures Option Contract you may
lose the entire Premium paid as the Futures Option
Contract may expire without being exercised by
you in which case the Futures Option Contract is
worthless.
(v) interest rates, dividends and other distributions paid
or payable in respect of the Underlying Instrument
and general risks applicable to markets.
(2) When you sell a Futures Option Contract, although
you receive the Premium upfront, you are exposed
to potential losses in the future in the event that the
price of the Underlying Instrument moves against
your position. The maximum amount of this
potential loss is unlimited and as such, selling
unprotected options comes with a high risk.
(i) the price of the Underlying Instrument;
(ii) the nominated Expiry Date and the time remaining
to expiry;
The Premium is comprised of two elements known as
intrinsic value and time value.
HALIFAX Product Disclosure Statement 11
Intrinsic value is the difference between the current
market price for the Underlying Instrument and the
Exercise Price at any point in time (for American-style
options). For example, a Call Futures Option will have
intrinsic value at a particular point in time when the
current market price for the Underlying Instrument is
above the Exercise Price because the buyer of the
option (where it is an American-style option) could
exercise the right at that particular point in time to
purchase the Underlying Instrument at the Exercise
Price, and then resell the Underlying Instrument at the
current market price for the Underlying Instrument,
thus realising a profit. On the other hand, a Put Futures
Option will have intrinsic value only when the current
market price for the Underlying Instrument is below the
Exercise Price because the buyer of the option (where
it is an American-style option) could exercise the right
at that point in time to sell the Underlying Instrument at
the Exercise Price and then purchase the Underlying
Instrument at the current market price for the Underlying
Instrument, thus realising a profit.
Futures Option Contracts traded on the ASX 24
are American Options and accordingly they may
be exercised at any time before the Expiry Date.
Therefore, the seller of a Futures Option Contract must
be prepared for that Futures Option Contract to be
exercised any time before the Expiry Date.
Time value is more complex. When the Premium
quoted of a Futures Option Contract is greater than
its intrinsic value, it is because it has time value. Time
value represents the amount an investor is prepared
to pay for the possibility that the market might move
in their favour during the life of the Futures Option
Contract. The amount of time value will depend on
whether the Futures Option Contract is in-the-money,
at-the-money or out-of-the-money. At any given time,
the at-the-money Futures Option Contract will have the
greatest time value. The further in or out of the money
the Futures Option Contract is, the less time value it will
have.
A Futures Option Contract’s time value is affected by
the following factors:
1. Time to expiry – the longer the time to expiry,
the greater the time value of the Futures Option
Contract. Time value declines as the expiry of the
Futures Option Contract draws closer. This erosion
of time value is called time decay. It is not constant,
but increases rapidly towards expiry.
2. Volatility – in general, the greater the volatility of
the Underlying Instrument, the greater the time
value will be. This is because the seller is exposed
to a greater probability of incurring a loss, and will
require higher premium income to compensate for
the increased risk.
12HALIFAX Product Disclosure Statement
3. Interest rates – an increase in interest rates
will lead to higher Call Futures Option premiums
and lower Put Futures Option premiums, all else
being equal. This reflects the cost of funding the
Underlying Instrument. The buyer of a Call Futures
Option can defer paying for the securities until the
Expiry Date, and invest the funds elsewhere during
this period. As interest rates rise, more interest can
be earned on the funds, so the Call Futures Option
is worth more to the option buyer. The effect of an
interest rate rise is the opposite for Put Options, as
the buyer is deferring the receipt, rather than the
expenditure, of funds.
9.7. Settlement
The settlement of Futures Options Contracts is
more complex than settlement of Futures Contracts.
In respect of ASX Clear (Futures), Futures Option
Contracts which are in-the-money or at-the-money are
automatically exercised by the Clearing House. Not all
exchanges automatically exercise at-the-money or inthe money options at expiry, particularly US exchanges.
You should check this with us before the Expiry Date.
10. Key Benefits of Trading
in Futures Contracts and
Futures Option Contracts
Futures Contracts and Futures Option Contracts provide
a number of benefits which must, of course, be weighed
against their risks. These potential benefits include:
• Ability to use Futures and Futures Options to
hedge – As a risk management tool, investors can
hedge exposure in the Underlying Instrument. For
example, selling Futures Contracts or purchasing
Put Options on the Futures Contract allows investors
to hedge against a fall in the value of a particular
Underlying Instrument.
• Ability to use Futures and Futures Options to
speculate – You can use Futures and Futures
Options for speculation, with a view to profiting from
market fluctuations in the Underlying Instrument. You
may take a view of a particular Underlying Instrument
and therefore invest in Futures and Futures Options
according to this belief.
Futures Contracts and Futures Option Contracts
PRODUCT DISCLOSURE STATEMENT
Futures Contracts and Futures Option Contracts
PRODUCT DISCLOSURE STATEMENT
• Leverage – The initial outlay for a Futures Contract
or a Futures Option Contract is not as much as
investing directly in the Underlying Instrument. An
investor can therefore purchase a Futures Contract
or a Futures Option Contract (representing a larger
quantity of the Underlying Instrument) for less outlay
and still benefit from a price move in the Underlying
Instrument. The ability to make a higher return for a
smaller initial outlay is called leverage. However, you
need to understand that leverage can also produce
increased risks and if the price move is unfavourable,
then the use of leverage makes it possible that you
will lose more than your Initial Margin for the Futures
or Futures Option Transaction (for more information
on leverage risk see section 11.1 of this PDS).
• Limited counterparty risk – There is limited
counterparty risk when trading Futures Contracts
and Futures Option Contracts as the Clearing House
for the relevant Futures Exchange stands behind the
contract guaranteeing performance of the transaction
(for more information on Clearing Houses see
section 8.4 of this PDS).
• Closing Out – Due to the system of registration and
novation referred to in section 8.4, Closing Out can
be achieved without going back to the original party
with whom the Futures Contract or Futures Option
Contract was traded. This is a major difference and
key benefit between OTC derivative products and
exchange traded derivatives.
• Range of market positions and strategies –
Since the prices in the Underlying Instruments
are constantly moving, there are always trading
opportunities, whether a particular Underlying
Instrument is increasing or decreasing in price.
There is the potential for profit (and loss) in both
rising and falling markets depending on the strategy
you employ. Strategies may be complex and will have
different levels of risk associated with each strategy.
• Flexibility – There is also some flexibility of
entering and exiting the market prior to expiry of a
position. This enables you to take a view on market
movements and trade accordingly. In addition, the
variety of Futures Contracts and Futures Option
Contracts combinations allows investors to develop
strategies regardless of the direction of the market.
• Standardisation – Futures are standardised and
interchangeable, meaning that Futures of a particular
class are perfect substitutes for each other. A
consequence of contract standardisation is that the
price is the only factor that remains to be determined
in the marketplace (outside of the contract month
and volume). Since all Futures for a given future
month in the same market are interchangeable, they
can be Closed Out against an opposite position in
the same contract. A trader who has bought a given
Futures Contract can cancel the position or Close
Out by selling the same contract. The net result is
that the trader no longer holds a position. Similarly,
a trader who has sold a given Futures Contract can
cancel the position or Close Out by buying the same
contract. The principle of standardisation also applies
to trading in Futures Option Contracts i.e. Futures
Option Contracts of a particular class are perfect
substitutes for each other. A trader who has bought
(or sold) a Futures Option Contract can Close Out
their position by selling (or buying) the same contract.
Refer section 8.10 for further information.
11. Significant risks
You should be aware that trading in Futures
Contracts and Futures Option Contracts
offered by us involves a high degree of risk. It is
important that you carefully consider whether
trading our products is appropriate for you in
light of your investment objectives, financial
situation and needs.
We have a risk management framework within the
software supporting the Trading Platforms which,
assuming you meet all of your obligations to us (as
set out in the Client Services Agreement), attempts to
limit your potential loss to the amount in your Account.
However, at all times, if you have open positions with us
your potential loss can be substantial and is not limited
to any amount.
We recommend that you do not risk money that you are
not in a position to lose and that you adopt a philosophy
of capital preservation and implement risk mitigation
techniques (such as the use of stop loss orders). For
more information on stop loss orders and other order
types, see Annexure A of this PDS.
The following is a description of some of the significant
risks associated with trading Futures Contracts and
Futures Option Contracts offered by us.
HALIFAX Product Disclosure Statement 13
11.1. General Risks
• Leverage – The use of Futures and Futures Options
involves a high degree of leverage. These products
enable a user to outlay a relatively small amount (in
the form of the Initial Margin) to secure an exposure
to the Underlying Instrument without having to pay
the full price of, for example, holding the Underlying
Instrument. You can effectively take a position with
the same results as you would get from purchasing
or selling the Underlying Instrument for example,
but for less initial outlay than the equivalent physical
transaction and still potentially benefit from a price
move. However, if the price move is unfavourable,
then the use of leverage makes it possible that
you will lose more than your Initial Margin for
the Futures Transaction and Futures Option
Transaction.
Accordingly, leverage gives the user the ability to
take a greater level of risk for a smaller initial outlay,
thus amplifying the potential risks and rewards.
• Client monies for investments through Trust
Account – Funds transferred to us are deposited
into our client trust account. However, your Net Free
Equity is held in an omnibus client account with
amounts in respect of our other clients. We refer you
to section 17.1 of this PDS for additional information.
• Substantial losses – Despite trying to Close Out
open positions, your loss on a Futures Transaction
or Futures Option Transaction could be very
substantial. Stop loss orders are instructions placed
by the client with us to Close Out an open Futures
Transaction or Futures Option Transaction if the
Underlying Instrument trades at or through a specific
level. Stop loss orders are often used to attempt
to limit or minimise the amount which can be lost
on an open Futures Transaction or Futures Option
Transaction. Stop loss orders may not always be
filled and, in any event, may not limit your losses to
the amounts specified in the order. The operation of
stop loss orders should be discussed with one of our
representatives.
• Payment of Variation Margin – If the price or value
of the Underlying Instrument moves against your
Futures Transaction or Futures Option Transaction,
you will be required to have sufficient funds in your
Account to meet your Margin Requirement in order to
maintain your Futures Transaction or Futures Option
Transaction. The amount of the Variation Margin may
be substantial.
14HALIFAX Product Disclosure Statement
If you fail to satisfy a Margin Call immediately, your
position may be Closed Out at a loss and you will
be liable for any shortfall in your Account balance.
Positions are marked to market on a generally
dynamic real time basis depending on the platform
you utilise, with payments being settled in real
time to account for market movements (for more
information about Margin Obligations see section
13 and Schedule E of this PDS). If the balance in
your Account is less than the amount of the Margin
Requirement to enter a new or maintain a Futures
Transaction or Futures Option Transaction, we
reserve the right to Close Out some or all of your
open positions or to refuse to allow you to enter
into a new Futures Transaction or Futures Option
Transaction.
• Market volatility – Futures Contracts and Futures
Option Contracts are subject to many influences
which may result in rapid fluctuations in the
Underlying Instrument and reflect unforeseen
events or changes in conditions with the inevitable
consequence being market volatility. Futures
Contracts and Futures Option Contracts can be
highly volatile and are very difficult to predict. Due
to such volatility, no Futures Contracts and Futures
Option Contracts may be considered as a safe trade,
and it is therefore recommended that you closely
monitor your open positions at all times.
Τhere is no guarantee or assurance that you
will make profits, or not make losses, or that any
unrealised profits or losses will remain unchanged. It
is impossible to ascertain the full extent of profits or
losses until all of you open positions are Closed Out.
In certain market conditions such as during extreme
price volatility in fast markets, prices on the Futures
Exchange may ‘gap’. A gap means that a price may
unexpectedly jump from one price level to another
without trading at prices in between those two price
levels. It is not possible to predict when a price
‘gap’ will occur or by how much. Price gaps are
generally a result of unexpected news or unknown
data being released. Traditionally, volatility can
increase significantly as a result of unexpected news
or unknown data being released such as terrorist
attacks, acts of god, or financial market collapse.
Further, information about prices or rates may come
from a number of sources and may not necessarily
be current when provided to you. Halifax does not
accept responsibility for this.
• Limited lifespan of options – All Futures Option
Contracts have a limited lifespan and their value
erodes as the Futures Option Contract approaches
its Expiry Date. It is therefore important to ensure
the Futures Option Contract selected meets your
investment objectives.
Futures Contracts and Futures Option Contracts
PRODUCT DISCLOSURE STATEMENT
PRODUCT DISCLOSURE STATEMENT
Futures Contracts and Futures Option Contracts
• Co-mingling of client monies
Funds paid to us by you are first paid into a client
trust account maintained by us. This means that
client funds (and property) transferred to us are not
available to pay general creditors in the event of
our receivership or liquidation. Client monies are
held, used and withdrawn in accordance with the
Corporations Act, this PDS and our Client Services
Agreement.
For money paid into our client trust accounts, you
should be aware that individual client accounts are
not separated from each other and all clients’ funds
are co-mingled into the one client trust account.
Generally, you should also be aware that the client
money provisions of the Corporations Act 2001
may not insulate any individual client’s funds from a
default in a client trust account if such a default were
to occur. Such a default may arise from trading by
any client or clients i.e. by a client failing to pay for all
losses incurred on their Account.
• Notifications are via the electronic platform that
you use – If you do not actively monitor your open
positions via the Trading Platform, you may not be
aware of a Margin Call/Account Position or when
some or all of your open positions are Closed Out.
• Order Acceptance Risk – When you place an order
(i.e. request to open or Close Out a transaction), we
have an absolute discretion whether or not to accept
and execute any such request. Our discretion applies
in relation to, but is not limited to, ‘Stop Loss orders’,
‘Market orders’, ‘Limit orders’, ‘Stop Entry orders’,
‘One cancels the other orders’, ‘If Done orders’ and
any other order type established and defined on the
relevant Trading Platform from time to time.
Our rights to refuse your request (to enter into a new
Futures Transaction or Futures Option Transaction
or to amend or Close Out an existing open position)
are set out in full at clause 6 of the Client Services
Agreement. You should refer to that clause for
the circumstances in which we may exercise our
discretion not to accept your order and to section 1 of
Annexure A of this PDS for further information. The
effect of our discretion is that an order you give may
not be executed and you may suffer loss (including
actual loss or lost opportunity) as a result. We are not
responsible for any such loss.
• Liquidity – Under certain conditions, it may
become difficult or impossible for you to Close Out a
position. This can, for example, happen when there
is a significant change in the price or value of the
Underlying Instrument over a short period of time.
• Use and Access to the Website – You are
responsible for providing and maintaining the means
by which to access a Trading Platform, which may
include without limitation a personal computer,
modem and telephone or other access line. Technical
problems or other conditions may delay or prevent
access. If you are unable to access the internet and
thus, the Trading Platform, it will mean you may be
unable to trade in Futures and Futures Options and
you may suffer loss as a result.
Furthermore, in unforeseen and extreme market
situations, we reserve the right to suspend the
operation of our online Trading Platform or any part
of it. We will however, endeavour to contact you
beforehand in this regard. In such an event, we
may, at our sole discretion (with or without notice),
Close Out your open positions at prices or values
we consider fair and reasonable at such a time. We
may impose volume limits on certain client accounts,
at our discretion. This could occur if you place an
order and we deem the size of the order to have
an excessive impact on the risk profile that we are
prepared to take. If you require further clarification
please contact our Operations Manager for additional
explanation.
• Electronic Trading Platforms – You should be
aware that there are a number of risks associated
with using internet-based Trading Platforms. Such
risks include, but are not limited to, risks related
to the use of software and/or telecommunications
systems such as software errors and bugs, delays
in telecommunications systems, interrupted service,
data supply errors, faults or inaccuracies and
security breaches.
These risks and the occurrence of disruptive events
are outside of our control and, accordingly, you will
have no recourse against us in relation to the use of
or availability of our Trading Platforms or any errors
in the software and/or related information systems.
There are important provisions regarding the use
of the Trading Platforms contained in the Client
Services Agreement. You must ensure that you fully
understand these provisions and the risks involved in
relying on an on-line, electronic trading system and
the limitations in the service that we can provide in
relation to the Trading Platforms.
We rely on a number of technology solutions to
provide you with the online Trading Platforms.
We have outsourced the operation of our Trading
Platforms to various third parties, and in doing so
have relied on these third parties to ensure the
systems are regularly updated and maintained.
Additional Trading Platforms may be offered from
time to time at our discretion. Trading on the Halifax
Trading Platforms may differ from trading on
electronic trading systems offered by other providers.
HALIFAX Product Disclosure Statement 15
A disruption to a Halifax Trading Platform could
mean you are unable to trade in a Futures Contract
or Futures Option Contract and that you may suffer a
financial loss or an opportunity loss as a result.
In most cases, orders can be placed using any of the
Trading Platforms we provide, however there may be
certain circumstances that could restrict order entry.
Some examples of these include:
1.Order size – this could occur if you are trading
and we deem the size of your order to be
potentially adverse to the risk profile that we
are prepared to take.
2.Product type – this could occur if the Futures
Contract or Futures Option Contract is illiquid.
3.Availability – this could occur as a result of the
Trading Platform server or connectivity being
down or inoperative.
4.Order type – this could occur if we deem that
the order was placed outside the current fair
value of the Underlying Product in an attempt
to protect you from error.
Please note that if you attempt to contact us by
phone to execute an order when the same order
could have been placed through the Trading Platform
i.e. the Trading Platform is available but for some
reason you choose to place the order by phone, you
may incur an additional fee (refer to section 18.5 of
this PDS). However, this fee will not be charged if
you are placing the phone order due to a disruption
to the Halifax Trading Platforms which results in you
not being able to place an order through the Trading
Platforms.
• Systems Risk – We are not responsible for any
external disruptions such as your computer and
internet service not being operational.
• Foreign Exchange Risk – We are not responsible
for exchange rate movements where you trade in a
Futures or Futures Option based on an Underlying
Instrument priced in a currency other your Account
currency. Your profit or loss will be determined by
movements in the price or level of the Underlying
Instrument and also by the impact of movements in
the exchange rate.
Your Account is always maintained in a specific
currency (which you nominate), for example AUD.
You will instruct us what you want this currency to
be. All profits, losses and all other variables (such as
fees) will be debited or credited to your Account in the
nominated Account currency (in this example, AUD)
at the prevailing exchange rate plus a conversion
fee (refer Section 18.3 and Schedule A for additional
details).
If you transact in a Futures or Futures Option where
it is denominated in a currency other than the
Account currency (e.g. crude oil traded on the New
York Board of Trade is priced in USD), all Margin
16HALIFAX Product Disclosure Statement
Requirements, profits, losses and all other variables
will be converted from the currency the Underlying
Instrument is denominated into the Account currency.
If you hold an open position and the exchange rate
when you Close Out the open position is different
from the exchange rate at the time you entered the
position, this will impact on the ultimate profit or loss
that is realised.
• Exercise of our Discretion to Close Out – We
have absolute discretion to Close Out a client’s
open position and at prices we determine, acting
reasonably (refer section 13). The effect of us
exercising our discretion is that we may Close Out
your open position and you may suffer loss as a
result (including actual loss or lost opportunity if the
price improves from the price the open position was
Closed Out). We are not responsible for any such
loss.
• Trading Platform Closed – Due to the dynamic
nature of the Futures or Futures Options , it is
possible that the value of your open positions will
change while the trading function of one or more of
our Trading Platforms is closed. In this case, you
will not be able to trade in a Futures Transaction or
Futures Option Transaction, including to Close Out
an open transaction until the trading function of the
Trading Platform re-opens. You may suffer a financial
loss or opportunity loss as a result.
• Basis Risk – The terms of a particular transaction
may not be a perfect hedge against a particular type
of risk or exposure where you are using a Futures
Contract or a Futures Option Contract as a risk
management tool (known as “basis risk”). Even small
differences between the terms of the transaction and
the value of the Underlying Instrument may create a
basis risk.
• Credit Risk – When you enter into a Futures
Transaction or Futures Option Transaction, you may
take counterparty credit risk on either Halifax, the
relevant Clearing Participant or the relevant Clearing
House for the Futures Transaction or Futures
Option Transaction (refer to section 8.9 above for
an explanation of the role of the Clearing House
and the Clearing Participant). It is possible that the
relevant counterparty will become insolvent while you
have open Futures Transactions or Futures Option
Transactions. In this event, we may not be able to
return some or all of the balance of your Account to
you (even though we might continue to be solvent). In
addition, you might face considerable delays before
you are able to access the amount (if any) that is able
to be recovered from the relevant counterparty.
• Other – Changes in taxation and other laws,
government, fiscal, monetary and regulatory policies
may have a material adverse effect on your trading in
Futures Contracts and Futures Option Contracts.
Futures Contracts and Futures Option Contracts
PRODUCT DISCLOSURE STATEMENT
PRODUCT DISCLOSURE STATEMENT
Futures Contracts and Futures Option Contracts
11.2. Risks associated
with Derivatives
Derivative markets can be highly volatile. Accordingly,
the risk of loss in trading in derivatives contracts can
be substantial. You should carefully consider whether
trading is appropriate for you in light of your personal
and financial circumstances. In deciding whether or not
to invest, you should be aware of the following matters:
• As noted in section 11.1 of this PDS, Futures
and Futures Options involve a high degree of
leverage because the Initial Margin requirements
are relatively small in comparison to the value of
the Underlying Instrument. The use of leverage
can lead to large losses. Even a slight fluctuation
in the price or value of the Underlying Instrument
could result in you incurring substantial losses.
• You could sustain a loss of the total balance of your
Account (and more). Your loss is not limited to that
amount i.e. you could lose additional money beyond
the funds you have transferred to us. In this situation
we will require those funds to be paid immediately.
• If the market moves against your position, you will
be required to transfer additional funds to us in order
to maintain your position i.e. to ‘top up’ your Account
balance (refer to section 12.5 of this PDS). Those
additional funds may be substantial. If you fail to
provide those additional funds immediately, we may
Close Out some or all of your open positions. You will
also be liable for any shortfall in your Account
balance following that closure.
• Under certain market conditions, it could become
difficult or impossible for you to manage the risk of
open positions by entering into opposite positions
in another contract or Close Out existing positions
(refer section 11.1 of this PDS under the heading
“Market Risk”).
• While the placing of contingent orders such as
a stop loss order may potentially limit your loss,
these orders may not limit your losses to the exact
amount that you specify. We will generally attempt to
execute a stop loss order at or near the price or value
requested, we cannot guarantee to execute the order
at that exact price.
• A client contemplating purchasing a deep outof-the-money (meaning that the Exercise Price
is significantly below the current market price for
the Underlying Instrument (for Call Options), or
significantly above the current market price for
the Underlying Instrument (for Put Options) option
should be aware that the chance of such an option
becoming profitable is generally remote.
• The maximum loss in buying a Futures Option
Contract is the amount of the Premium, but the risks
in selling a Futures Option Contract are the same
as in other Futures Contract trading, that is, they are
unlimited. Futures Option Contracts have a limited life
span and their value erodes as the Futures Option
Contract approaches its Expiry Date. Hence, it is
important to ensure that the Futures Option Contract
selected meets your investment objectives.
• The Futures Exchanges and Clearing Houses have
discretionary powers in relation to the market and
operation of facilities, for example, power to suspend
trading, restrict exercise, impose position limits, and
terminate open positions etc., in order to ensure fair
and orderly markets are maintained.
• Transacting in Futures Contracts and Futures Option
Contracts on a Futures Exchange outside Australia
involves the execution and clearing of trades subject
to the rules of that non-Australian Futures Exchange
and the laws of the country in which that Futures
Exchange is domiciled. Neither ASIC nor the ASX
regulate activities of foreign Futures Exchanges,
including the execution, delivery and clearing of
transactions, nor do they have the power to compel
enforcement of the operating rules of a foreign
Futures Exchange or any applicable foreign laws.
Generally, the foreign Futures Transaction and
Futures Options Transaction will be governed by
applicable foreign law. This is true even if the Futures
Exchange is formally linked with a Futures Exchange
in Australia. Moreover, such rules and regulations
will vary depending on the foreign country in which
the transaction occurs. If you trade on foreign
Futures Exchanges you may not have the benefit of
protective measures provided by the Corporations
Act. In particular, your funds may not be subject to
the same protections afforded by Australian client
trust or segregated client account controls (client
trust accounts), the benefit of the ASX 24 operating
rules, or the protection against counterparty risk
provided by the Clearing House Refer to section 8.9
of this PDS for further information.
• A client may incur losses that are caused by matters
outside Halifax’s control. For example, a regulatory
authority exercising its powers during a market
emergency may result in losses for the client. A
regulatory authority can, in extreme situations,
suspend trading or alter the price at which a position
is settled. This could also result in a loss to the client.
HALIFAX Product Disclosure Statement 17
12. Margin obligations
Futures and Futures Options are subject to margin
obligations i.e. clients must have a sufficient balance in
their Futures and Futures Options Account for security/
margining purposes. Accordingly, you are responsible to
meet all margin payments we require.
As noted above, the Clearing House contracts with
Clearing Participants as principals. Where a Clearing
Participant has an exposure under an open Futures
Contract to the Clearing House, the Clearing House
will call amounts of money known as margin from the
Clearing Participant as cover. Margins are generally
a feature of all exchange-traded derivative products
(including Futures Contracts and Futures Option
Contracts) and are designed to protect the Clearing
House against default. A margin is the amount
calculated by the Clearing House as necessary to
cover the risk of financial loss on an open exchangetraded derivatives contract due to an adverse market
movement.
The relevant Clearing House calculates margin amounts
using computerised systems which take into account a
range of variables. Amounts of margin are determined
daily by the Clearing House, following the close of
trading each day. In times of extreme volatility an intraday margin call may be made by the Clearing House.
You should visit the websites of the relevant exchanges
and Clearing Houses for further details of the relevant
margining requirements applicable to them. Our website
(www.halifax.com.au) contains links to the website
of each Futures Exchange on which Halifax will accept
orders from clients to trade.
12.1. Types of Margin
There are two components of the Margin Requirement
which you will be required to pay in connection with
Futures Transactions and Futures Options Transactions,
namely Initial Margin and Variation Margin.
Initial Margin
In order to enter into a Futures Transaction or Futures
Option Transaction you will be required to pay us the
Initial Margin or have an amount of Net Free Equity in
your Account that is at least equal to the Initial Margin.
This amount represents collateral for your exposure
under the transaction and covers the risk we take on
you.
18HALIFAX Product Disclosure Statement
The Initial Margin required depends on the Futures
Exchange or Clearing House (or sometimes both)
at which the Futures Contracts or Futures Option
Contracts is traded. Initial Margin will vary from time
to time according to the volatility of the market. This
means that an Initial Margin may change after a position
has been opened, requiring a further payment (or
refund, where applicable) unless you hold excess. Initial
margins are carefully calculated to cover the maximum
expected movement in the market from one day to the
next.
The buyer of Futures Option Contracts (“long”) are
generally not subject to margin obligations as the buyer
of a Futures Option Contract is required to pay the full
value of the Premium at the time the Futures Option
Contract is acquired however, in some instances,
margin may be required to hold the position. The seller
of the Futures Option Contract (“short”) is entitled to
receive a portion of the Premium based on the mark to
market valuation of the Option Contract (i.e. the seller
of a Futures Option Contract does not receive the
full value of the Premium upfront) and would require
payment of Initial Margin to open the position.
The Initial Margin will typically be between 2% and
10% of the face value of the Futures Contract or the
Futures Options Contract. However, it is possible for
Initial Margins to be above this range. The amount may
change at any time and at the discretion of the relevant
Clearing House (or the relevant Futures Exchange, in
some cases) and you should refer to the website of the
relevant Clearing House or Futures Exchange to confirm
the actual requirement for your proposed transaction at
any particular time.
The Initial Margin is payable to Halifax immediately
upon entering the Futures Contract or the Futures
Options Contract (where applicable). This means that
sufficient cleared funds must be deposited in your
account with Halifax before you can trade.
The table in Schedule D sets out details of where you
can find information about the Margin Requirements in
respect of each Trading Platform. Please contact Halifax
for further information with regards to this.
Margin Requirements differ depending on the
Trading Platform you choose. In choosing a
Trading Platform, you should carefully consider
the Margin Requirements of each Trading
Platform as Margin Calls could have an adverse
impact on your investment.
Futures Contracts and Futures Option Contracts
PRODUCT DISCLOSURE STATEMENT
PRODUCT DISCLOSURE STATEMENT
You must have an amount of Net Free Equity in your
Account that is at least equal to the Initial Margin
amount before entering into a Futures Transaction or
Futures Option Transaction.
Futures Contracts and Futures Option Contracts
Variation Margin
Variation margin is determined by reference to the
market value of the particular position at the close
of business each day. In other words, each Futures
Contract and Futures Options Contract (where
applicable) is effectively marked to market on at least
a daily basis. Marked to market means that an open
position is revalued on a daily basis to the current
market price. The difference between the current day’s
valuation compared to the previous day’s valuation is
the amount which is debited (in the case of unrealised
losses) or credited (in the case of unrealised profits) to
your Account. The valuations are calculated using the
settlement price (at the close of trading on each day) of
the Futures Contract or Futures Option Contract (where
applicable) as determined by the relevant Futures
Exchange or relevant Clearing House.
As the face value of your Futures Contracts or Futures
Options Contracts will constantly change due to
changing market conditions, the amount required to
maintain the open positions will also constantly change.
This is also commonly referred to as Variation Margin.
The amount of your Margin Requirements (being the
Initial Margin and any adverse Variation Margin) at any
one time will be displayed in the open positions report
made available through the Trading Platform.
Thus, any adverse price movements in the market must
be covered by further payments from you. Halifax will
also credit Variation Margin to you when a position
moves in your favour.
The Variation Margin is therefore the unrealised profit or
loss on your open positions which is equal to the dollar
value movement of your Futures Contracts or Futures
Options Contracts (where applicable) calculated from
the rate at which you entered the Futures Contracts or
Futures Options Contracts (where applicable) compared
against the current market value.
Clients can incur losses before a contract is Closed Out.
In the case of ASX 24 contracts, brokers are not obliged
to call their clients for Variation Margin on a daily basis,
but must call them to pay a Margin should the client’s
net Variation Margin position exceed 25% of the total
Initial Margin paid by the client on all open positions.
We note that Margin Calls are made on a net account
basis i.e. should you have several open positions with
respect to various financial products, then Margin Calls
are netted across the group of open positions. In other
words, the unrealised profits of one transaction can be
used or applied as Initial Margin or Variation Margin for
another transaction.
We will generally attempt to provide you with notice
of any adverse Variation Margin by making a Margin
Call (via ‘pop-up’ screens or screen alerts on the
Trading Platform. Refer to section 12.2 of this PDS for
additional information regarding notifications of Margin
Requirements).
It is your responsibility to monitor your Variation
Margin obligations. Any notification of a Margin
Call will be via a ‘pop up’ screen or a screen
alert which you will only receive notice of if
you access your online Account online via the
website for your Trading Platform. We might
not notify you of a requirement to pay Variation
Margin, and if you fail to make such a Payment
we could Close Out your position.
12.2. Notifications regarding
Margin Requirements
Any Margin Calls will generally be notified to you
using ‘pop-up’ screens or screen alerts on the Trading
Platform, and you are required to log into the system
regularly when you have open positions to ensure you
receive notification of any Margin Calls.
We refer you to our website at www.halifax.com.au
which provides samples of various ‘pop-up’ screens or
screen alerts which are part of the functionality of the
various Trading Platforms and in particular refer you to
the sample notification of margin usage. In addition refer
to Schedule D.
It is your responsibility to actively monitor and
manage your open positions and your obligations,
including ensuring that you meet your Margin
Requirements. It is also your responsibility to
ensure you are aware of any changes in the Margin
Requirements.
We are under no obligation to contact you in the event
of any change to the Margin Requirements or any actual
or potential shortfalls in your Account.
12.3. Failing to meet a Margin Call
Halifax generally applies risk limits (referred to as
“Default Liquidation thresholds”) to ensure that your
Margin Utilisation does not exceed certain pre-defined
levels (the levels vary depending on your Trading
Platform and are described in Schedule E). If your
Margin Utilisation exceeds the Default Liquidation
threshold for your Trading Platform, a Margin Call will
be applied to your Account. If you do not meet a Margin
Call immediately, we may Close Out some or all of your
open Transactions without notice to you. The Default
Liquidation threshold is determined by the third party
provider for your Trading Platform. It is implemented for
risk management purposes, and may be varied by the
third party provider at any time.
HALIFAX Product Disclosure Statement 19
PRODUCT DISCLOSURE STATEMENT
You must ensure that you have a sufficient Net Free
Equity in your Account at all times to meet your
changing Margin Requirements i.e. you should maintain
a buffer of Net Free Equity against adverse Variation
Margins arising.
Please be aware that if the Net Free Equity in
your Account is not sufficient to meet your Margin
Requirements and you have not met a Margin Call,
Halifax may Close Out some or all of your open
positions at the risk of generating a loss (the loss might
be greater than the balance of your Account, in which
case you will owe us the shortfall). Please note that this
could be immediate if certain events occur (for more
information about risks see section 11 of this PDS).
IMPORTANT: If you fail to meet any Margin
Call, then we may in our absolute discretion
(but without an obligation to do so), Close Out,
without notice, all or some of your open Futures
Transactions or Futures Option Transactions
and deduct the resulting realised loss from your
Account. Any losses resulting from us Closing
Out may require you to provide additional funds
to us. If a Close Out occurs you will not be able
to enter into another Futures Contract or Futures
Option Contract until you transfer additional
funds to us.
12.4. How Margin Calls
are to be met
When we make a Margin Call you must transfer the
amount of funds that we request into our nominated
bank account. All funds received from clients are held,
used and withdrawn in accordance with the Client
Services Agreement.
All interest that may accrue on any positive balance in
your Account will be kept by us, unless we otherwise
agree with you (see section 18.2).
Margin Calls must generally be met immediately. This
means that sufficient cleared funds must be transferred
to the relevant account in addition to meeting the Margin
Requirements as a buffer against adverse Variation
Margins arising.
20HALIFAX Product Disclosure Statement
12.5. How to transfer money to us
You will only be permitted to deal in and maintain
open transactions on the basis of cleared funds being
provided to meet your Margin Requirements. It is your
responsibility to provide the funds for your margin
obligations on time. You should bear in mind accepted
Australian banking practice in relation to fund transfers
or deposits from other financial institutions, which
typically require 3 business days clearance for personal
cheques and 1 business days clearance for direct
deposits (depending on the timing of your transfer). Any
delay in crediting your Margin Requirements is at your
risk.
In practical terms, you also need to know and prepare
yourself for the methods of depositing money in
response to a Margin Call as this may determine if some
or all of your open positions are Closed Out (for more
information about when a Futures Contract or Futures
Options Contract may be Closed Out see section 13 of
this PDS).
Some of the methods for transferring money in
response to a Margin Call that can be used by you are:
• Real Time Gross Settlement (RTGS) – This is an
immediate transfer of cleared funds which may or
may not be available at the institution that you bank
with.
• Electronic Transfer of Funds (ETF) – This is a
transfer of funds that in most instances if lodged with
an Australian bank, will be placed as cleared funds
usually within the next business day, but can be
delayed through various external factors outside of
your or our control.
• International Electronic Transfer of Funds (IETF)
– This is a transfer from an overseas bank that in
most instances if lodged with an overseas bank will
be placed as cleared funds usually within five (5)
business days, but can be delayed through external
factors outside of your or our control.
• Bank cheque – This is a cheque that is issued by
a bank that traditionally requires three (3) business
days or more to clear and would be required to
be deposited with a ‘special answer’ to be made
available as cleared funds the following business
day (if required), but can be delayed through external
factors outside of your or our control.
• Business cheque and personal cheque – This is
a cheque that is issued by a business or person that
traditionally requires three (3) business days or more
to clear and would be required to be deposited with
a ‘special answer’ to be made available as cleared
funds the following business day (if required), but can
be delayed through external factors outside of your or
our control.
Futures Contracts and Futures Option Contracts
The Default Liquidation threshold is not a guarantee that
Halifax will close out any Transactions, or that any risk
will be limited to avoid or minimise your losses on your
Account. Refer to Schedule E for the Default Liquidation
threshold levels of each platform.
PRODUCT DISCLOSURE STATEMENT
Futures Contracts and Futures Option Contracts
If we receive confirmation of RTGS and ETF, we will
determine this as cleared funds. Unfortunately, as IETF,
bank cheques, business cheques and personal cheques
can be cancelled or withdrawn, we will need to assess
on a case by case basis whether this method of deposit
is appropriate or, alternately if cleared funds will still
need to be provided by you.
Whilst RTGS or ETF facilities may imply an immediate
transfer of funds, you should also be aware that these
processes can take additional time which could have
some impact on your ability to trade and to control
your open positions at that time. We recommend that
you clarify with your bank or financial institution what
timeframes or delays may be experienced in the transfer
of funds via RTGS or ETF facilities to us.
You should be aware that timing delays in your
ability to transfer funds to us could affect your
ability to satisfy a Margin Call in time, which
could result in us Closing Out an open Futures
Transaction or Futures Option Transaction. We
will not suggest to you any amount of buffer
capital to use to safeguard from a Margin Call.
13. Opening and Closing
Out a Futures or Futures
Option Position
We have proprietary risk models in place that may
mean we Close Out a position with no obligation to
consult you.
13.1. Expiry Dates and First
Notice Days
Futures Contracts may be left open up to and including
the Expiry Date or First Notice Day (whichever comes
first) and can be Closed Out at any time prior to the
Expiry Date or First Notice Day. If you do not Close
Out by the Expiry Date or First Notice Day (whichever
comes first), the Futures Contract will be Closed Out
automatically by the system on Expiry Date or First
Notice Day and cash settled at the last available closing
price as determined by the Futures Exchange or
Clearing House.
Futures Option Contracts may be left open up to and
including the Expiry Date and can be Closed Out at any
time prior to the Expiry Date (if it is an American Option)
or at Expiry Date (if it is a European Option). If you do
not Close Out by the Expiry Date then:
•
if the Futures Option is out-of-the-money or at-themoney then it will expire worthless; or
•
if the Futures Option is in-the-money then holder
will be assigned the Underlying Instrument (i.e. a
Futures Contract).
You can open or Close Out a Futures or Futures Option
position (or part of it) by contacting us via the Trading
Platform or by contacting us within business hours to
determine the current market price for the Underlying
Instrument.
After receiving (and accepting) your instructions, we will
then provide a quote for the current market price or level
for the Futures Contract or Futures Option Contract.
You will then decide whether to accept that price or
level. If you accept the price or level, you will instruct us
to either open a Futures Transaction or Futures Option
Transaction or Close Out an existing open Futures
Transaction or Futures Option Transaction. Please note
that we are not obliged to accept a trading instructions,
e.g. if there is insufficient Net Free Equity in your
Account to meet your Margin Requirements (for more
information about your margin obligations see section
12 of this PDS). Other circumstances where we may be
unable to accept your order include (but are not limited
to) where we are unable to quote prices in the relevant
Futures Contract or Futures Option Contract due to the
unavailability of information:
• from the relevant exchange on which the Futures
Contract or Futures Option Contract is traded; or
• where there are problems with systems, the website
or Trading Platform (see risks in section 11 of this
PDS).
HALIFAX Product Disclosure Statement 21
PRODUCT DISCLOSURE STATEMENT
14. Electronic Trading Platforms
We use a variety of online trading platforms.
It is important to note that there are significant and fundamental differences between each Trading Platform.
These differences include:
• The nature of the online interface through which you can transact and monitor your Account;
• The Underlying Instruments over which you can enter into a Futures Contract or Futures Option Contract; and
• The fees and costs you are charged for the Futures Contract or Futures Option Contract.
You should carefully consider which of the Trading Platforms is likely to best meet your needs.
We have outsourced the operation of the online interface for each Trading Platforms to various third parties and in
doing so has relied upon these third parties to ensure the relevant systems and procedures are regularly updated and
maintained.
The third party electronic Trading Platforms that we use and operate are:
Trading Platform name
Third Party for Trading Platform
Web address to access Trading Platform
1.
Halifaxonline
Saxo Capital Markets (Australia) Pty Ltd*
www.halifax.com.au
2.
Trader Work Station
Interactive Brokers LLC**
www.halifax.com.au
* au.saxomarkets.com
** www.interactivebrokers.com
We encourage clients to review the websites of these third party providers to gain an understanding of how they
operate.
22HALIFAX Product Disclosure Statement
Futures Contracts and Futures Option Contracts
Before you enter into a Futures Transaction or Futures Option Transaction you should open a demo
account and conduct simulated trading. This enables you to become familiar with the attributes of the
various online Trading Platforms.
PRODUCT DISCLOSURE STATEMENT
Futures Contracts and Futures Option Contracts
15. Trading Hours
The trading hours during which you can trade in various
Futures Contracts and Futures Option Contracts will
depend on the relevant Futures Exchange on which
they are traded. We refer you to the relevant exchange
website (a list of which is set out in an additional
document our website www.halifax.com.au) or by
contacting us (refer section 6 of this PDS for our contact
details).
This means that you are able to view live prices and
place live orders through the Trading Platform during
these hours.
Outside these hours, you may still access the Trading
Platforms and view your Account, Market Information,
research and our other services. However, there will not
be any live prices or trading. It is at our sole discretion
to provide services to you outside these hours. Any
changes to trading hours will be displayed by the
relevant platform.
16. Trading Examples
When trading Futures Contracts and Futures Option
Contracts, you should be aware of the risks and benefits
and review examples of how the Futures Contracts and
Futures Option Contracts can be traded.
We have prepared various trading examples which can
be found on our website at www.halifax.com.au.
These trading examples are provided purely for the
purpose of demonstrating to you how dealing in our
Futures Contracts and Futures Option Contracts may
work. As these trading examples are for illustrative
purposes only, they should not be taken as an indication
or commitment by us as to any values that might
apply to any trade(s). Furthermore, the figures used
do not reflect your personal circumstances and do not
constitute general or personal financial product advice.
17. How we deal with
your money
17.1. Accounts
Amounts you pay to us are deposited into a client trust
account we maintain. This means that client funds (and
property) transferred to us are held on trust, used and
withdrawn in accordance with the Corporations Act, this
PDS, ASX and ASX 24 rules (where applicable) and
our Client Services Agreement. In brief, this means that
those funds are not available to pay general creditors in
the event of our receivership or liquidation.
Amounts used to meet Margin Requirements will be
deducted from the client trust account and paid to us.
We also note that monies lodged or deposited with us
to meet Margin Requirements are not treated as funds
belonging to Halifax but are treated as funds belonging
to the client. Money held in the client trust account
may be invested in accordance with the Corporations
Act. Halifax is entitled to retain all interest earned on
the money held in its client trust account (“Participant
Clients’ Segregated Account”).
For money deposited in our client trust accounts, you
should be aware that:
• individual client accounts are not separated from
each other;
• all clients’ funds are co-mingled into the one account;
• the client money provisions may not insulate any
individual client’s funds from a default in our client
trust account.
Please note that we are entitled to retain all interest
earned on the money held in its client trust accounts,
with our Clearing Participants or from authorised
investments made from the client trust accounts.
17.2. Dealings with Clearing
Participants
As described in section 8.9 above, the Clearing House
requires Clearing Participants to pay margin obligations
to it and Clearing Participants require Halifax to pay
margin obligations to them i.e. Halifax is required
to deposit monies with its Clearing Participants to
maintain the open positions. When you enter into a
Futures Transaction or Futures Option Transaction, you
may have no rights of recourse against the Clearing
Participant, or against any other person.
18. Charges, fees and
other amounts payable
Fees and charges will be charged to your Account at the
time your transaction is entered into and Closed Out in
respect of open positions.
The fees and charges you bear vary depending on a
number of factors, including:
• the Trading Platform you use. The tables in
Schedules A-B set out some of the differing costs
you bear under each Trading Platform;
• your agreement with us.
For some of our clients we will agree to lower fees
and costs. For example, we may agree to this if you
are a regular, high volume trader.
HALIFAX Product Disclosure Statement 23
18.1. Commission
We deduct from your Account a commission (sometimes
referred to as a transaction fee) on each Futures or
Futures Option trade you make (both on entering into
the Futures Transaction or Futures Option Transaction
and on Closing Out the Futures Transaction or Futures
Option Transaction). The level of commission we charge
you may be subject to negotiation prior to transacting.
The commission you can expect to pay for transacting
in Future Contracts and Futures Option Contracts is
based on a “per lot basis” meaning that the commission
charged will be dependent on the amount of Futures
Contracts or Futures Option Contracts you transact at
any one time.
The commission level you will be charged for a Futures
Transaction and a Futures Options Transaction differs
depending on:
• the Trading Platform you use. Our:
– maximum commission rate;
– minimum commission rate; and
– standard commission rate;
for Futures Transactions and Futures Options
Transactions entered into, or Closed Out under
each Trading Platform and in respect of each
relevant Futures Exchange, are set out in a table in
Schedule B;
• the exchange on which the Futures Contract and
Futures Options Contract trade; and
• whether you have negotiated (either with us, or with
your financial adviser, acting on our behalf), a rate
that is different to the standard rate for transactions
on the relevant exchange and for the relevant Trading
Platform. For example, we might agree:
– to accept a commission from you at rates that are
lower than our standard rates for your Platform, if
you trade a high volume of Futures Contracts or
Futures Option Contracts; or
– to charge a commission rate that is higher than
our applicable standard rate if we give you higher
levels of service than normal. You will not be
charged a commission rate that is higher than the
standard rate for your Trading Platform unless you
expressly agree to the higher rate.
Additional commissions can be charged for telephone
orders (see section 18.5).
Details of commissions are included in your daily
statement. This is an online report that you can access
and print upon demand through your Trading Platform
website.
The commission we charge generally includes any
Futures Exchange and Clearing House fees that are
payable. If these fees are not included, you will be
notified at the time of the transaction. Fees charged
by a particular Futures Exchange for execution of
transactions, or a particular Clearing House for clearing
of transactions, vary and can be found on the particular
Futures Exchange or Clearing House’s website. The
websites for the relevant Futures Exchanges are
listed on our website www.halifax.com.au, or can be
obtained by contacting us (refer section 6 of this PDS
for our contact details).
These fees are subject to change from time to
time. For up to date fees please contact one of our
representatives.
Example:
You enter into a Futures Transaction by buying 10
crude oil Futures Contracts at $97.30. Halifax charges a
commission of US $25 per lot. This means on entering
into the Futures position, you pay:
10 (the amount of contracts) x US $25 (Halifax’s
commission) = US $250.
If you decide later that day to Close Out the entire
holding of crude oil Futures position at $97.80 (10
contracts), this means on Closing Out the Futures
position, you pay:
10 (the amount of contracts) x US $25 (Halifax’s
commission) = US $250.
The total commission “round trip” (both on entering and
Closing Out the Futures Transaction) is US $500 (this
amount excludes any taxes that may apply). Therefore,
you would need to make a gross profit of at least
US$500 before you would begin to realise a net profit
on the Futures Transaction.
18.2. Interest on credit and
debit Balances
Interest on debit balances
Interest is charged where your Net Free Equity is in
debit, i.e. the balance of your Account is less than your
Margin Requirement. Your Account could go into debit
in certain circumstances, e.g. in the event of a major
market movement against your position where you fail to
meet a Margin Call, we may exercise our right to Close
Out some or all of your open positions (refer to section
12.3 of this PDS). If the realised loss is greater than the
balance of your Account then your Account will go into
debit.
The interest rate you will be charged differs depending
on the Trading Platform you use. The way we calculate
the interest rate for each Trading Platform is set out in
Schedule A.
Interest on debit balances is calculated daily and
applied monthly.
24HALIFAX Product Disclosure Statement
Futures Contracts and Futures Option Contracts
PRODUCT DISCLOSURE STATEMENT
PRODUCT DISCLOSURE STATEMENT
No interest on credit balances
Futures Contracts and Futures Option Contracts
Unless otherwise negotiated with us, there is no interest
applied where your Net Free Equity is in credit.
If, through negotiation, we offer any interest on any
positive Net Free Equity in your Account, then factors
which may affect the rate of interest include the type
of currency in which the Account is denominated, a
discount to the relevant reference interest rate (for
example, if your Account is denominated in AUD, the
RBA LIBOR rate) of up to 300 RBA LIBOR basis points.
The interest credit will be calculated on the Net Free
Equity in your Account, being the balance of any cash
in your Account (after adjustment for unrealised gains
or losses that have been marked to market) and minus
your Margin Requirement in respect of all open Futures
Transactions and Futures Option Transactions (where
applicable).
The interest rate applicable for the calculation of interest
on any Net Free Equity (if we agree to any such interest
credit) will be calculated as 3.0% under the LIBOR rate
for the relevant currency (for example, if your Account
is denominated in AUD if the AUD LIBOR rate was
3.5% per annum, you would receive interest at a rate of
0.50% per annum). Please note that where the LIBOR
rate for the relevant currency is 3.0% or lower, you will
not be entitled to receive any interest on any credit
balance in your Account.
Interest on credit balances is calculated daily on your
Net Free Equity balance and applied monthly within
the following calendar month. The Margin Requirement
for any open Futures Transactions and Futures Option
Transactions (where applicable) does not accrue any
interest.
Please note that current LIBOR rates are available from
the following website: www.ice.com.
18.3. Conversion fee
Your Account is always maintained in a specific
currency that will be nominated by you (for example
AUD). All profits, losses and all other variables (such
as commissions, interest and other fees and costs) will
be debited or credited to your Account in the nominated
Account currency (in this example, AUD).
If you enter into a Foreign Currency Transaction (i.e.
you transact in a Futures Contract or Futures Option
Contract where the Futures Contract or Futures Option
Contract is denominated in a currency other than the
Account currency (e.g. a Futures Contract traded on
the New York Board of Trade)), all profits, losses and
all other variables will be calculated in the currency in
which the contract is denominated and then converted
to the Account currency. For example, if your Account
currency is AUD and you transact in a Futures Contract
that is denominated in USD, any profit, loss or all
other variables will be converted from USD to AUD.
This occurs each time there is a conversion to or from
your Account currency.
For each currency conversion, you will be charged a
conversion fee. The conversion fee is levied by applying
an FX Spread (see below for an explanation of FX
Spread) to the exchange rate applied when converting
the profit, loss or all other variables to the Account
currency. That is, an additional conversion fee will not
be deducted from your Account, rather the fee will
be incorporated into the exchange rate at which the
Foreign Currency Transaction is executed.
Measuring the FX Spread: what is a “pip”?
The FX Spread is the difference between the exchange
rate available to the third party provider for the Trading
Platform and the exchange rate we offer you to open or
Close Out a Transaction. It is generally expressed as a
number of “pips”.
A “pip” is an abbreviation for the “price interest point”
for an exchange rate transaction. A pip generally refers
to the fourth decimal point of a unit of the relevant
currency for the relevant Transaction but may, in some
instances, be expressed in a different decimal point i.e.
second decimal point for Japanese Yen.
The FX Spread can include two components:
• the spread incorporated into the exchange rate
offered to us by the third party provider for your
Trading Platform (e.g., for Foreign Currency
Transactions through Halifaxonline, Saxo Capital
Markets will incorporate a spread into the exchange
rate it offers to us in respect of the relevant Foreign
Currency Transaction). This spread will comprise an
amount on account of the third party provider’s profit;
and
• the additional spread (if any) we apply in respect of
Transactions on your Trading Platform. The additional
FX spread we apply in respect of Foreign Currency
Transactions on each Trading Platform are set out in
the table in Schedule A. This spread will comprise an
amount on account of profit for Halifax.
The conversion fee is applied both in entering
into and Closing Out Foreign Currency
Transactions and for every currency conversion
in respect of the Futures Transaction and Futures
Option Transaction (e.g. calculations of the
commission, funding and interest charges etc.).
That is, on a “round trip” (i.e. a Foreign Currency
Transaction that is opened and then later Closed),
you will be charged two conversion fees.
You can assess the aggregate FX Spread you will incur
in respect of a Transaction by comparing the exchange
rate buy and sell prices on your Trading Platform
website – the different exchange rate refers to the
aggregate FX Spread you would incur on a round trip
Transaction entered into and then Closed Out at those
rates.
HALIFAX Product Disclosure Statement 25
PRODUCT DISCLOSURE STATEMENT
Example:
If you Close Out a Futures Transaction and realise a
gross profit of $8,700, this amount would be converted
as follows:
USD/AUD (rate provided by
the third party provider for the
Trading Platform) = 1.08620
Adjustment of 0.75% = 1.08620 x 0.0075
= 0.0081465
Actual rate used to convert = 1.08620 – 0.0081465
= 1.0780535
Converted amount in AUD = 8,700 x 1.0780535
= AU$ 9,379.07
Conversion fee
= AU$ 70.87
18.4. Goods and Services Tax
(GST)
The commission amount agreed may be subject to GST
in accordance with Australian Taxation Law. GST is
charged at 10% (where applicable) per Futures Contract
or per Futures Option Contract but are separate to any
premium value received or paid in respect of Futures
Options, and are detailed separately on trades executed
reports issued for each Transaction. Where the amount
is due in a currency other than the Account currency
(i.e. AUD), the amount will convert to the Account
currency using the Foreign Currency Transaction, and
will be shown in both the traded and converted currency
on the report.
18.5. Data charges
If you subscribe to a data service through your Trading
Platform, the data fees in respect of the service will be
charged through your Account. This amount is charged
on a “pass through” basis meaning that we only pass
on the cost charged by the third party provider. The
cost of the data is dependent on the exchange and the
tier of the market data. The data fee will be deducted
from your Account on the first business day of each
month (other than the charge for the first month of the
subscription which will be deducted immediately to
cover the remainder of the month on a pro rata basis).
18.6. Orders over the Telephone
We may charge you a fee at our sole discretion of an
amount that we see fit, not exceeding the maximum
fee (i.e. $25 per Futures Contract) for accepting an
instruction from you over the telephone to transact. This
fee will not be charged in the event the relevant Trading
Platform is not available.
26HALIFAX Product Disclosure Statement
18.7. In the event of default
If you fail to pay amounts payable to us or fail to
perform certain obligations owed to us as required
under the Client Services Agreement such as failing
to meet your Margin Requirement, we can take steps
to protect our position. For example, we may be able
to Close Out some or all of your open positions, and to
charge interest on any debit balance in your Account
(as described in section 18.2) and on any other costs
incurred by us associated with recovering payment from
you.
The interest rate applicable for the calculation of interest
on any debit balance differs depending on your Trading
Platform, and is calculated in the manner described in
section 18.2.
19. Confirmation of
Transactions
Once you have entered an order into one of the Trading
Platforms, the system will automatically report the main
elements of that order to you in a ‘pop up’ window. This
is a ‘preliminary notification’ and provides to you a quick
reference point for your trade and for your convenience
that will enable you to print a confirmation of the primary
data, including the quantity, price and the date and
time the order was transmitted to us. It is not designed
to comply with section 1017F of the Corporations Act.
Once your order has been executed you can obtain a
comprehensive trade confirmation by accessing the
daily statement online. This is an online report that
you can access and print upon demand and highlights
all of the particulars concerning the transaction in
accordance with section 1017F of the Corporations Act.
We refer you to our website at www.halifax.com.au
which provides samples of various ‘pop-up’ screens
which are part of the functionality of the various Trading
Platforms and in particular, refer you to the sample trade
confirmation.
If you have provided us with an email or other electronic
address, you consent to confirmations being dispatched
to you electronically, including by way of the information
posted to your Account in the Trading Platform. It is
your obligation to review any confirmation immediately
to ensure its accuracy and to report any discrepancies
within 48 hours. Confirmations can be viewed
electronically through the Trading Platform and from
daily statements (an example of a daily statement is
available on our website).
Futures Contracts and Futures Option Contracts
Following is an example of how a conversion fee might
be charged to you.
PRODUCT DISCLOSURE STATEMENT
20. Market Information
We may make available to you through one or more of its services, a range of financial information that is generated
internally or obtained from agents, vendors or partners (third party providers). This includes, but is not limited to,
financial market data, quotes, news, analyst opinions and research reports, graphs or data (“Market Information”).
Futures Contracts and Futures Option Contracts
As this Market Information comes from a variety of different sources, the quality of advice could vary. Following is a list
of current providers of this Market Information:
1.
Australian Financial Review
www.afr.com.au
2.
Bloomberg LP
www.bloomberg.com
3.
Thomson Reuters
www.reuters.com
4.
Interactive Brokers LLC
www.interactivebrokers.com
5.
Global Futures & Forex Ltd
www.gft.com.au
6.
IRESS Market Technology Ltd
www.iress.com.au
7.
Gain Capital Group Incorporated
www.gaincapital.com
8.
Macquarie Group Limited
www.macquarie.com.au/mq/prime/home.htm
9.
Pats Systems PLC
www.patsystems.com
10.
Barclays Capital (Barx System)
www.barx.com
11.
Deutsche Bank AG (Autobahn)
www.autobahn.db.com
12.
Various financial web sites globally
13.
Various financial news networks including CNBC, Bloomberg
14.
Various Australian and global newspapers
15.
Various specific industry notable individuals
16.
Various Australian and Global banks and financial institutions
Advice based Market Information means that by accepting advice from us you acknowledge that the Market Information
may have come from one or more of these sources and therefore, have determined that you accept this risk.
Unless otherwise instructed, Market Information provided by us via email or through our website is not intended
as advice. We may or may not endorse or approve the Market Information and we make it available to you only as
a service for your own convenience. We, and our third party providers, do not guarantee the accuracy, timeliness,
completeness or correct sequencing of the Market Information or warrant any results from your use or reliance on the
Market Information.
Market Information may quickly become unreliable for various reasons including, for example, changes in market
conditions or economic circumstances. Neither we, nor the third party providers, are obliged to update any information
or opinions contained in any Market Information and we may discontinue offering Market Information at any time
without notice.
HALIFAX Product Disclosure Statement 27
21. Cooling Off
Arrangements
22.3. Tax File Number
withholding rules
There are no cooling-off arrangements for the Futures
Contracts and Futures Option Contracts offered
by Halifax. This means that when you enter into a
transaction in a Futures Contract or Futures Option
Contract with Halifax, you do not have the right to return
the product, nor request a refund of the money paid
to acquire the product. Should you change your mind
after entering into a transaction with Halifax you should
Close Out your position by entering into an opposite
transaction (although loss may be incurred in doing so).
The Tax File Number withholding rules only apply to
certain investments (referred to in this paragraph as
‘Special Investments’) as set out in the income tax
legislation. Those withholding rules do not apply to
Futures Contracts and Futures Options Contracts as
those contracts are not Special Investments for the
purposes of the Tax File Number withholding rules.
22. Taxation Implications
In circumstances where a Futures Contract or Futures
Option Contract gives rise to gains that are assessable
or losses that are deductible, any fees other than
charges or commissions should be allowable as a
deduction at the time they are paid by the investor and
debited against their Account.
Trading in Futures and Futures Options we offer has
the potential for generating substantial profits and the
potential for generating substantial losses. The tax
implications of such profits or losses may be significant
depending on the personal circumstances of the
individual client. We do not provide tax advice and we
recommend you seek your own professional tax advice
and the impact any profits or losses generated from
trading may have on your overall tax position.
Notwithstanding, the following information is provided
and should be regarded as general information only.
22.1. Profits and losses on
Futures and Futures Options
Any gains derived or losses incurred by you in respect
of a Futures Contract and Futures Option Contract
should be included in your assessable income. When
calculating the amount of profit or loss, you need to
consider the difference between the Closing Value and
the Open Contract Value. Should you hold your Futures
and Futures Options for the purpose of trading you
should seek independent taxation advice.
22.2. Interest on your Futures and
Futures Options Account
Any interest received by you in respect of your Futures
and Futures Option trading should be included in your
assessable income. In most cases this will be at the
time the interest is credited to your Account. Interest
payable by you in respect of your Futures and Futures
Option Account (including Default Interest) should be
allowable as a deduction at the time it is debited against
your Account.
28HALIFAX Product Disclosure Statement
22.4. Other fees, charges or
commissions
23. Dispute Resolution
We want to know about any problems or concerns
you may have with our advice or services so we can
take steps to resolve the issue. We have internal and
external dispute resolution processes in place to resolve
any complaints or concerns you may have, quickly and
fairly. A copy of these procedures may be obtained by
contacting us and requesting a copy.
Any complaints or concerns should be directed to
Halifax (by telephone, facsimile, or letter) at the address
and telephone/fax numbers provided in section 6 of
this PDS, or by email to the Operations Manager –
[email protected].
We will provide acknowledgement of receipt of written
complaints within 5 business days, and seek to resolve
and respond to complaints within 30 business days
of receipt. We will initially investigate your complaint
internally, and provide you with our decision, and the
reasons on which it is based, in writing.
If you are dissatisfied with the outcome, you have
the right to lodge a complaint with the Financial
Ombudsman Service Ltd (contact details below), an
approved external dispute resolution scheme, of which
we are a member (membership number is F-3307).
Note that there is a prescribed limit for complaints made
to FOS. You may also make a complaint via the ASIC
free call Infoline on 1300 300 630.
Financial Ombudsman Service Ltd
GPO Box 3
Melbourne NSW 3001
Toll free:
1300 78 08 08
Facsimile:
+613 9613 6399
Website:www.fos.org.au
Email:[email protected]
Futures Contracts and Futures Option Contracts
PRODUCT DISCLOSURE STATEMENT
PRODUCT DISCLOSURE STATEMENT
Futures Contracts and Futures Option Contracts
24. Privacy
We have a Privacy Policy which outlines the obligations
we have in managing the personal and sensitive
information we hold about our clients, potential
clients, and others. If you would like to view a copy
of the Privacy Policy please visit the website at
www.halifax.com.au.
25. Glossary of Terms
Following is a list of products/terminology used in this
PDS and their meaning:
Account: Your Account is the record kept by Halifax of
the amount of funds or margin you have provided to us
in respect of a Trading Platform, as adjusted for:
• profits and losses incurred on Closed Out of relevant
Transactions;
• the payment or withdrawal of funds to or by Halifax
from or to the client;
• interest charged or credited to the Account;
• commission and other fees charged to the Account;
and
• other adjustments made in accordance with the
Client Services Agreement.
AFS Licence: Australian Financial Services Licence.
American Option: An option which can be exercised
at the Exercise Price or Strike Price on, or before, the
Expiry Date or Maturity Date.
ASIC: Australian Securities and Investments
Commission.
ASX: The Australian Securities Exchange (operated by
ASX Limited).
ASX 24: Formerly the Sydney Futures Exchange, part
of the ASX.
ASX Clear (Futures): Formerly the SFE Clearing
Corporation, one of the two licence holding entities of
the ASX Clearing Corporation.
AUD: Australian Dollars.
Call Option: An Option Contract which gives the buyer
the right, but not the obligation, to buy the Underlying
Instrument from the seller at (in the case of a European
Option) or before, (in the case of an American option)
a future point in time (the Expiry Date) at a pre-defined
price (the Exercise Price or Strike Price).
Clearing House: Generally means a clearing house,
including ASX Clear or any other body or corporation
appointed by the ASX to act as a Clearing House for
ASX 24. It also means any Clearing House or clearing
facility from time to time operating in or authorised or
appointed by any Futures Exchange on which a broker
may trade.
Clearing Participant: A participant of a Clearing
House, as that term is defined in the operating rules of
the relevant Clearing House.
Client Services Agreement: The Agreement between
you (the client) and Halifax titled “Client Services
Agreement”.
Close Out: To close out an existing open Futures
Transaction or Futures Option Transaction by
entering into an equal and opposite offsetting Futures
Transaction or Futures Option Transaction. To close out
a bought or long position requires selling, and closing
out a sold or short position requires buying.
Corporations Act: The Corporations Act 2001 (Cth) as
amended from time to time.
Default Liquidation threshold: The limit of Margin
Utilisation allowed by the Counterparty before
liquidation of the portfolio occurs.
European Option: An option which can only be
exercised at the Exercise Price or Strike Price on the
Expiry Date or Maturity Date.
Exercise Price: The price at which the Option Contract
may be bought or sold the Underlying Instrument, as
defined in the terms of the Option Contract. This is also
referred to as Strike Price.
Expiry Date: In relation to an Option Contract, the date
on which the Option Contract expires or matures. This
is also referred to as the Maturity Date. In relation to a
Futures Contract, this is the date on which the Futures
Contract expires.
First Notice Day: The day in which the buyer of a
Futures Contract can be called upon by the exchange
to take delivery of the underlying commodity. The First
Notice Day varies by contract and it also depends on
exchange rules.
FSG: Financial Services Guide.
Foreign Currency Transaction: A transaction
in respect of which the Underlying Instrument is
denominated in a currency other than the base currency
for your Account (generally AUD).
Futures Contract: A Futures Contract is a
standardised agreement, traded on a Futures
Exchange, to deliver or to take delivery of a specific
quantity or a specific product (“Underlying Instrument”)
for settlement on a specified date.
Futures Exchange: A futures exchange is a financial
market (including a stock exchange) where participants
can trade Futures Contracts and Futures Option
Contracts, including ASX24 and ASX. We refer you to
our website which contains a list of the various futures
exchanges on which Halifax will accept orders from
clients to trade together with links to the website of each
futures exchange.
HALIFAX Product Disclosure Statement 29
PRODUCT DISCLOSURE STATEMENT
Futures or Futures Transaction: A Transaction
that concludes with the parties settling the difference
between the purchase price and sale price of a Futures
Contract.
Saxo Capital Markets: Saxo Capital Markets
(Australia) Pty Ltd.
Futures Option Contract: An Option Contract gives
the buyer the right, but not the obligation, to buy or sell
the Underlying Instrument at the prescribed Exercise
(Strike) Price of the option in return for payment of a
Premium and gives the seller the obligation to give or be
given the Underlying Instrument if exercised in return for
a Premium received.
(i) the parties to a cash settled Futures Contract are
required, in accordance with the operating rules
of the Relevant Exchange, to make an adjustment
between them according to whether the settlement
value of the Futures Contract is greater or less than
the contract value; and
Initial Margin: The minimum amount of Net Free
Equity that a client must in their Account balance in
order to enter into a Futures Transaction or Futures
Option Transaction.
Interactive Brokers: Interactive Brokers LLC.
(ii) the parties to a deliverable Futures Contract are
required, in accordance with the operating rules
of the relevant Futures Exchange, to give delivery
(in the case of the seller) and to take delivery and
make payment (in the case of the buyer).
Strike Price: In relation to a Futures Option Contract,
the price at which an option may be exercised. This is
also referred to as the Exercise Price.
RBA: Reserve Bank of Australia.
Margin Call: A demand for additional funds to
be transferred to your Account to meet Margin
Requirements either because of adverse price
movements (Variation Margin) or an increase in Initial
Margin requirements.
Trading Platform or Halifax Trading Platform:
The electronic trading platform through which you
access and trade Futures and Futures Options, and
as described in section 14 of this PDS. Each Trading
Platform corresponds to a different third party provider.
The following Trading Platforms are available:
Margin Requirements: The Initial Margin as adjusted
by any Variation Margin used to cover credit risk.
• Halifaxonline (the third party provider for this Trading
Platform is Saxo Capital Markets);
Margin Utilisation: Expressed as a percentage
and relates to the proportion of the Account balance
which you are utilising at any time for your Margin
Requirements.
• Trader Work Station (the third party provider for this
Trading Platform is Interactive Brokers);
Maturity Date: In relation to a Futures Option Contract,
the date on which the Futures Option Contract matures,
settles or expires. This is also referred to as the
Expiry Date.
Net Free Equity: The balance of your Account minus
your Margin Requirement in respect of all open Futures
Transactions and Futures Option Transactions as
adjusted for any unrealised profit or loss.
OTC: Over the counter (not dealt with on any exchange)
contracts or products that are traded (and privately
negotiated) directly between two parties.
PDS: This Product Disclosure Statement, as
supplemented from time to time by any supplementary
product disclosure statement.
Premium: The price of a Futures Option Contract
i.e. the amount the buyer pays and the seller receives
for the rights conveyed by the option.
Pricing Source: The relevant Futures Exchange that
publishes the bid price, ask price or last trade price for
the Futures Contract or Futures Option Contract.
30HALIFAX Product Disclosure Statement
Transaction: Each Futures and Futures Options
transaction entered into by you and Halifax governed by
the Client Services Agreement, and Futures Transaction
and Futures Option Transaction has a corresponding
meaning.
Underlying Instrument: In the case of a Futures
Contract, an Underlying Instrument is an asset, index,
reference rate, commodity, currency or other type
of financial product or any other thing whose price
movement determines the value of the Futures Contract.
In the case of an Option Contract, an Underlying
Instrument is a Futures Contract.
USD: United States Dollar.
Variation Margin: The difference between the current
value of a contract and the previous valuation, this
mark to market valuation could represent an additional
amount required to meet the difference in prices.
Futures Contracts and Futures Option Contracts
FX Spread: The spread we apply in converting the
foreign currency in respect of a Foreign Currency
Transaction, in connection with a conversion fee, as
described in section 18.3.
Settlement Date: In relation to a Futures Contract, the
day on which:
PRODUCT DISCLOSURE STATEMENT
ANNEXURE A
Futures Contracts and Futures Option Contracts
ORDERS TYPES YOU CAN PLACE
WITH HALIFAX
1. Important notice about
this section
When you request to place an order (i.e. instruction to
open or Close Out a transaction) of one of the types
described in this Annexure A of this PDS, we have
an absolute discretion whether or not to accept and
execute any such request. Our discretion includes, but
is not limited to, ‘Stop Loss orders’, ‘Market orders’,
‘Limit orders’, ‘Stop Entry orders’, ‘One cancels the
other orders’, ‘If Done orders’ and any other order
type established and defined on the relevant Trading
Platform from time to time.
Our rights to refuse your request to receive/place an
order (to establish a new position or amend an existing
open position) are set out in full at section 6 of the
Client Services Agreement. You should refer to these
paragraphs for the circumstances in which Halifax may
exercise its discretion not to accept your order.
Halifax, via its Trading Platforms, provides continuous
quotations in the Futures Contracts and Futures
Option Contracts offered by Halifax. There is no
pre-determined percentage or amount by which the
quoted price of a Futures Contracts and Futures Option
Contracts can vary from the price previously quoted on
the relevant Trading Platform. Any quotation provided
by us is valid for as long as it is displayed on the Trading
Platform. You should ensure that you enter any order to
trade immediately if the price or value quoted is a price
at which you wish to trade.
2. Description of Orders
Types
2.1. Market orders
A Market order is an order to be filled immediately
at the best price available and may be used to enter
into a position or Close Out an open position at the
current quoted price at which we are willing to deal. We
will endeavour to execute Market orders at the price
displayed on the relevant Trading Platform and at the
time the order is transmitted from software provided by
Halifax.
2.2. Stop Loss orders
A Stop Loss order is an order placed with the aim of
limiting or minimising the potential loss on an open
position. It is an order that becomes a Market order only
when the Underlying Exchange Rate trades at the rate
you specify or at an inferior price.
Stop Loss orders must be placed a minimum distance
from our current bid and offer prices. The minimum
distance away for a Stop Loss order placement is
specific to the individual Trading Platform you use.
Please contact Halifax for further information as to the
minimum distance required.
Stop Loss orders placed on Futures and Futures
Options will be filled if the rate offered by the Futures
Exchange on the relevant Trading Platform is traded at
a rate equal to or inferior to the rate at which you have
placed your Stop Loss order (subject to there being
sufficient liquidity). Stop Loss orders are processed
in price level, and then time received order. If liquidity
is insufficient at your price level, your Stop Loss order
may be filled at a rate inferior to that at which they were
originally placed.
Stop Loss orders placed on Futures and Futures
Options may be filled if the rate quoted by us are equal
to or inferior to the rate at which you have placed your
Stop Loss order. Your Stop Loss orders may also be
filled at a rate inferior to those at which they were
originally placed.
We will execute a Stop Loss order once the following
conditions are met:
• The offer price has reached the Stop Loss order
price in the case of a buy order, or the bid price has
reached the Stop Loss order price in the case of a
sell order; and
• The price offered by the Futures Exchange on the
relevant Trading Platform has traded at or through
the level at which the Stop Loss order is placed.
If “gapping” occurs in the market and as a result, the
price offered by Halifax on the relevant Trading Platform
also gaps through your specified price (stop level),
then the Stop Loss order will be executed at the next
available price.
Due to the above factors, Halifax does not
guarantee that your Stop Loss order will be
executed at the same price you requested.
Please note that you cannot enter Market orders into
the relevant Trading Platform outside of the trading
hours of the relevant exchange. Trading hours of the
relevant exchanges are available by viewing the relevant
exchange website (for more information of the relevant
exchanges see section 15 of this PDS).
HALIFAX Product Disclosure Statement 31
2.3. Stop Entry orders
2.5. Limit orders
A Stop Entry order is an order placed to open a new
position or increase an existing open position at a rate
which is inferior to the current rate offered by Halifax.
You may use this type of order when you expect that the
price will move significantly in a particular direction from
its existing rate.
A Limit order is an order that can only be filled at a
specified rate or better and may be used by you to either
open or Close Out an open position at a predetermined
price that is more favourable to you than the current
rate. We will execute your Limit order when one or more
of the following conditions are met:
Also note that Stop Entry orders must be placed a
minimum distance from the current bid and offer rate.
The minimum distance for a Stop Entry order is specific
to the individual Trading Platform you use. Please
contact Halifax for further information as to the minimum
distance required.
• The Halifax offer price has reached the price of your
buy Limit order or the Halifax bid price has reached
the price of your sell Limit order; or
• The price offered by Halifax on the relevant Trading
Platform has been bid or offered at your Limit order
price.
We recommend that you contact Halifax before you
begin trading to determine if the Futures or Futures
Option you wish to trade allows the use of Stop
Entry orders. Depending on the Trading Platform
used, you may or may not be permitted to place
Stop Entry orders.
Limit orders may be executed at a level that is more
favourable to you than the predetermined rate you
selected when placing the Limit order. This will usually
be where the rate offered by Halifax on the relevant
Trading Platform is more favourable to you than the
Limit order you have placed.
2.4. Market if Touched order
A Market if Touched order is an order that becomes a
Market order when the rate offered trades at a specified
rate at least once. In other words, if the market touches
your specified order rate then your order is executed
by Halifax at the next available rate. Order placement
only occurs when your pre-set trigger level (or market
condition) is met.
Market if Touched orders must be placed a minimum
distance from the current bid and offer rates. The
minimum distance for a Market if Touched order is
specific to the individual Trading Platform you use.
Please contact Halifax for further information as to the
minimum distance required.
Where your Limit order is not executed due to, for
example, a lack of liquidity it would remain subject to
the above conditions of execution with Halifax at the
limit rate set by you. Please note it is possible that
you cannot enter Limit orders into the relevant Trading
Platform outside of the trading hours.
2.6. One Cancels the Other orders
(“OCO” orders)
This is an order that is comprised of two orders, one
of which cancels the other when filled i.e. it is the
combination of both a Limit order and a Stop Loss order
where the execution (or cancellation) of one order will
automatically cancel the other order (also referred to
as “one-cancels-other” orders). It is an order type that
may be used to Close Out an open position and take a
profit if the Futures Contract or Futures Option Contract
moves favourably for an open position or to potentially
limit the loss if the Futures Contract or Futures Option
Contract of the relevant Futures Exchange moves
against the open position. It may also be used to open a
new position.
This order is linked to If Done Orders (refer section 2.7
of this Annexure A of this PDS). If you place both of
these orders at the same time and the If Done Order
is triggered then the OCO order will automatically be
implemented.
32HALIFAX Product Disclosure Statement
Futures Contracts and Futures Option Contracts
PRODUCT DISCLOSURE STATEMENT
PRODUCT DISCLOSURE STATEMENT
2.7. If Done or Contingent orders
(If Done Orders)
Futures Contracts and Futures Option Contracts
This order is also the combination of two orders; where
the second of the two orders only becoming active
should the first order be executed.
For example, you may place an If Done order with
a Limit order. In this situation, if the Limit order is
executed, then the If Done order comes into effect. This
order type is linked to OCO orders described above in
section 2.8 of this Annexure A of this PDS.
2.8. Good ’Til Cancelled orders
(“GTC” Orders)
A GTC Order means that the order you place will remain
in the relevant Trading Platform until it is either executed
according to the terms of that GTC order or cancelled
by you.
We note that Halifax reserves the right to cancel a GTC
order due to, among other things, insufficient excess
monies in the client Account. For more information
about circumstances in which Halifax may exercise its
discretion to Close Out your position see section 13 of
this PDS.
2.9. Standing Order
A Standing Order means an instruction to execute an
order for a specified volume on a recurring basis if
triggered unless otherwise cancelled.
We note that Halifax reserves the right to cancel a
Standing Order order due to, among other things,
insufficient excess monies in the client Account. For
more information about circumstances in which Halifax
may exercise its discretion to Close Out your position
see section 13 of this PDS.
3. Halifax Order Durations
Conditional orders (for example Limit orders, Stop
Loss orders and OCOs) can be placed as Day orders
or Good ’Til Cancelled (“GTC”) orders as described in
section 2.8 of this Annexure A of this PDS.
A Day order means that the order you place will remain
active for that trading day only i.e. it will automatically be
cancelled by Halifax at the close of the trading day on
the relevant exchange.
Day orders will only be cancelled by Halifax if they
are not executed or are cancelled by you before this
time. Should you wish to maintain that order in the
Trading Platform for the next trading day of the relevant
exchange, you will have to re-submit that order.
Please note that a Day order and a Day Trade are not
the same thing. A Day order is an order that is “good for
the day” on which it is placed. This may or may not be
executed (depending upon market activity) and will be
cancelled by Halifax if unexecuted at the close of the
trading day on the relevant exchange.
A Day Trade is a set of executed transactions that result
in a position being opened in a Futures Contract or
Futures Option Contract and Closed Out on the same
day. In other words, it is a transaction that was only
open for the one day.
4. Cancelling orders
If you Close Out a position, you must ensure that
you cancel all and any related orders you have
placed against that previously open position. This is
particularly important for If Done orders (which includes
a combination of two separate orders). We urge you
not to Close Out one order without considering the
consequences of another order left open with Halifax.
Failure to do so will mean that the order remains at risk
of execution.
If you wish to cancel any orders, they may be cancelled
using the Trading Platform that you are using at a time
when the Trading Platform is available to process the
cancellation i.e. the same as the trading hours (refer to
section 15 of this PDS).
HALIFAX Product Disclosure Statement 33
PRODUCT DISCLOSURE STATEMENT
5. Summary of Orders Types
ORDER TYPE
CODE
DESCRIPTION
Market
MKT
An order filled immediately at the best price available.
Stop Loss
S/L
An order that becomes a market order only when the price offered by
Halifax on the relevant Trading Platform trades at a specified price.
Stop Entry
S/E
An order placed to open a new position or increase an existing open
position at a price which is inferior to the current price offered by Halifax.
Market if Touched
MIT
A price order that becomes a Market order when the price offered by Halifax
on the relevant Trading Platform trades at a specified price at least once.
Limit
LMT
An order that can be filled only at a specified price or better.
One Cancels the Other
OCO
An order that includes two orders, one of which cancels the other when
filled.
Also referred to as one-cancels-other.
If Done
ID
An order that includes two orders, where the second of the two orders only
becoming active should the first order be executed.
Good ’Til Cancelled
orders
GTC
An order which remains in the relevant Trading Platform until it is either
executed according to the terms of that order or cancelled by you.
Standing Order
SO
A Standing Order means an instruction to execute an order for a specified
volume on a recurring basis if triggered, unless otherwise cancelled.
34HALIFAX Product Disclosure Statement
Futures Contracts and Futures Option Contracts
To summarise, following is a table setting out in simplified terminology a description of the order types described in
section 2 of this Annexure A above. For more detailed explanation you are referred to section 2 of this Annexure A of
this PDS.
PRODUCT DISCLOSURE STATEMENT
Futures Contracts and Futures Option Contracts
SCHEDULE A
Platform
Interest
Conversion Cost
Halifaxonline
Unless otherwise negotiated with Halifax,
there is no interest applied on accounts
with positive Net Free Equity.
Trading in a product denominated in a
currency other than the Account currency
of the account will incur an FX conversion.
The conversion rate used to convert is the
rate of the specific currency at the time of
the trade plus or minus 75 basis points.
This will be applied on a per transaction
basis. For example, the Account currency
of the account is in AUD, and you are
trading a USD denominated product, then
the rate used to convert into USD would
be the AUDUSD rate as at the time of the
Interest is accrued on a daily basis and
posts the actual interest monthly on the first trade plus or minus 75 basis points.
The rate of the conversion can be found in
business day of the following month.
Trades Executed under Reports section of
the HalifaxOnline account.
If the account contains a negative Net Free
Equity, Halifax will charge interest on the
account at the daily underlying LIBOR ask
rate plus 7.00% of the underlying Account
currency (for example, if your Account held
AUD, and the AUD LIBOR is 4.00% per
annum, you will be charged interest at a
rate of 11.00% per annum).
Trader Work Station
Unless otherwise negotiated with Halifax,
there is no interest applied on positive cash
balances.
Trading in a product denominated in a
currency other than the Account currency
of the Account will incur an FX conversion.
IB accounts allow multiple currencies held
at any one time, and if a particular currency
contains a negative cash balance, Halifax
will charge interest on the Account at the
relevant interest rate supplied through
Interactive Brokers (shown at https://
www.interactivebrokers.com/en/index.
php?f=interest&p=schedule2) plus 1.00% of
the underlying currency dependent on the
balance tier (for example, if your Account
held AUD 50,000, and the benchmark
interest rate is 4.00% per annum, you will
be charged interest at a rate of 5.00% per
annum).
The conversion rate used to convert is the
rate of the specific currency at the time
of the trade, or at a time up to the client’s
discretion, or at a time up to Halifax’s
discretion with the permission from the
client. For example, the Account currency
of the Account is in AUD, and you are
trading a USD denominated product,
then the rate used to convert into USD
(assuming no USD in the Account) would
be the AUDUSD rate as at the time of the
trade if the trade was to open a position.
If the trade was to close the position, or
if there exists currency other than the
Account currency, the time to convert those
amounts may be at the discretion of the
client, or at the discretion of Halifax with
the permission of the client. For example,
if a USD denominated position was closed
with the profit remaining in USD, then the
conversion back into AUD may be done at
any time at the discretion of the client, or at
the discretion of Halifax with the permission
of the client with the rate used being the
rate at the time of the trade.
Interest is accrued on a daily basis and
posts the actual interest monthly on the
third business day of the following month.
The rate of the conversion can be found in
Trades under the Activity Statement within
Account Management, or under the Trade
Log from within the platform.
HALIFAX Product Disclosure Statement 35
PRODUCT DISCLOSURE STATEMENT
SCHEDULE B
Halifaxonline
Futures
Futures
Commission
(per lot)
Minimum
Commission
(per lot)
Maximum
Commission
(per lot)
Futures
Option
Commission
(per lot)
Minimum
Commission
(per lot)
Maximum
Commission
(per lot)
AUD
AUD 11
AUD 2
AUD 55
AUD
AUD 8
AUD 6
AUD 55
BRL
BRL 20
BRL 10
BRL 100
CAD
CAD 6
CAD 5
CAD 55
CAD
CAD 11
CAD 2
CAD 55
EUR
EUR 6
EUR 5
EUR 55
CHF
CHF 13.2
CHF 2
CHF 60
GBP
GBP 11
GBP 5
GBP 55
EUR
EUR 11
EUR 2
EUR 55
HKD
HKD 55
HKD 30
HKD 500
GBP
GBP 11
GBP 2
GBP 55
JPY
JPY 1050
JPY 750
JPY 5000
HKD
HKD 77
HKD 20
HKD 500
SEK
SEK 75
SEK 10
SEK 350
JPY
JPY 1100
JPY 750
JPY 5000
USD
USD 6
USD 5
USD 55
NZD
NZD 16.5
NZD 3
NZD 55
SEK
SEK 71.5
SEK 10
SEK 350
SGD
SGD 16.5
SGD 3
SGD 60
USD
USD 11
USD 2
USD 55
Trader Work Station
Futures Options
Trader Work Station
Futures
Futures
Commission
(per lot)
Minimum
Commission
(per lot)
Maximum
Commission
(per lot)
Futures
Option
Commission
(per lot)
Minimum
Commission
(per lot)
Maximum
Commission
(per lot)
AUD
AUD 9
AUD 6
AUD 55
AUD
AUD 9
AUD 6
AUD 55
CAD
CAD 8
CAD 5
CAD 55
CAD
CAD 8
CAD 5
CAD 55
CHF
CHF 8
CHF 5
CHF 60
CHF
CHF 8
CHF 5
CHF 60
EUR
EUR 6
EUR 3
EUR 55
EUR
EUR 6
EUR 3
EUR 55
GBP
GBP 5
GBP 3
GBP 55
GBP
GBP 5
GBP 3
GBP 55
HKD
HKD 100
HKD 50
HKD 500
HKD
HKD 100
HKD 50
HKD 500
JPY
JPY 1000
JPY 750
JPY 5000
JPY
JPY 1000
JPY 750
JPY 5000
KRW
KRW 4500
KRW 2500
KRW
KRW
KRW 4500
KRW 2500
KRW 75000
SGD
SGD 8
SGD 6
SGD 60
SGD
SGD 8
SGD 6
SGD 60
USD
USD 8
USD 5
USD 55
USD
USD 8
USD 5
USD 55
36HALIFAX Product Disclosure Statement
Futures Contracts and Futures Option Contracts
Halifaxonline
Futures Options
PRODUCT DISCLOSURE STATEMENT
SCHEDULE C
Futures Contracts and Futures Option Contracts
Default Account Currency
Unless otherwise instructed by the client
AUD
SAXO – Halifaxonline (Saxo Trader)
✓
INTERACTIVE BROKERS – Trader Work Station
✓
NON – PLATFORM OR TRANSIT
✓
USD
Please Note: For a list of other Account currencies available please contact the platform support desk or treasury services at Halifax.
SCHEDULE D
Initial Margins – Security
Deposit – Leverage Rate
Term used
Reference URL
On the Platform
SAXO – Halifaxonline
(Saxo Trader)
Margin
au.saxobank.com
Account è Trading Conditions
INTERACTIVE BROKERS –
Trader Work Station
Margin
www.interactivebrokers.com
Account è Trade ticket
SCHEDULE E
Platform
Default Liquidation
threshold
(expressed as
percentage of Margin
Utilisation)
Reference URL
On the Platform
SAXO – Halifaxonline
(Saxo Trader)
100%
au.saxobank.com
Account è Account Summary
è Margin Summary
è Margin Utilisation
INTERACTIVE BROKERS
– Trader Work Station
100%
www.interactivebrokers.com
Account è Available for Trading
è Current Excess Liquidity
è Current Available Funds or
Special Memorandum
Please Note: This is a guide only and may change without notice, please read the entire PDS in particular – Payment of
Variation Margin on page 14 and 12.3 Failure to meet a Margin Call on page 20.
: If your Margin Utilisation exceeds the Default Liquidation threshold for your Trading Platform, a Margin Call will
be applied to your Account. If you do not meet a Margin Call immediately, we may Close Out some or all of your
Open Transactions without notice to you.
HALIFAX Product Disclosure Statement 37