Download LOMBARD ODIER (EUROPE) S.A. NETHERLANDS BRANCH

Lombard Odier (Europe) S.A.
Netherlands Branch
GENERAL TERMS AND CONDITIONS
Lombard Odier (Europe) S.A. · Netherlands Branch
Herengracht 466 · 1017 CA Amsterdam · Nederland
Credit institution regulated by the Commission de Surveillance du Secteur Financier (CSSF)
and the Nederlandsche Bank (DNB).
E-mail: [email protected]
January 2014
Table of contents
I.
II.
General provisions
5
1.Scope
5
2.
Rules of Conduct
5
3.
Information required for the provision of certain investment services
6
4.Accounts
6
5.
Number of Account Holders
8
6.
Powers of attorney
8
7.
Signatures and Authority
8
8.
Credit facilities
8
9.Notices
9
10.Correspondence
9
11.
Waiver relating to risks inherent in means of communication
10
12.
Recording of telephone conversations
10
13.
Data protection and confidentiality
10
14.
Duty of verification and claims
11
15.
The Bank’s liability
12
16.
The Client's responsibility in tax matters
12
17.
Protection of deposits and financial instruments
12
18.
Conflict of interest policy
13
19.
Tariffs, charges and interest
13
20.
Calculation of time-limits
14
21.Outsourcing
14
22.
14
Civil incapacity and death
23.Assignment
14
24.Proof
14
25.Amendments
15
26.
Termination of business relationships
15
27. Applicable law and jurisdiction
15
Payment services
16
28.Principles
16
29. Receipt of payment orders
16
30. Consent
16
31. Correction
16
32. Exchange and interest rates
16
33. Execution of payment orders
17
34. Refunds
17
35. Lack of verification
17
36. Defective execution of payment orders
18
37. Payment transaction initiated by or through the payee 18
38. Requests for refunds of payment transactions initiated by or through the payee
18
39. Blocking and cancellation of orders
18
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 3
III.
40. Freezing of accounts
18
41. Information
18
Safekeeping of financial instruments and investment services
19
42. Custodianship of shares and securities 19
43. Client representation
20
44. Investment services
20
45. Instructions issued to the Bank
20
46. Stock exchange regulations
20
47. Measures incumbent upon the Client relating to securities transactions
21
48. Information on the nature of and risks associated with financial instruments
21
49. Release from liability concerning high-risk investments
21
50. Investments in derivative instruments
24
51. Securities lending 27
Appendix 1: Markets in Financial Instruments Directive (MiFID)
31
Appendix 2: Risks Associated with Financial Instruments
41
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 4
I. General provisions
1.Scope
1.1
The relationship between the account holder(s) (hereinafter the "Account Holder(s)" or the "Client(s)") and Lombard Odier (Europe) S.A. (hereinafter
the "Bank") shall be governed by these general terms and conditions (hereinafter the "General Terms and Conditions") as amended from time to
time, without prejudice to any special agreements. The General Terms and Conditions determine the conditions governing the provision of services
by the Bank and the rights and obligations of the parties.
1.2 The Bank is a credit institution under Luxembourg law, approved by the Ministry of Finance of the Grand Duchy of Luxembourg under n°23/12 and
subject to the supervision of the Luxembourg Commission for the Supervision of the Financial Sector (Commission de Surveillance du Secteur
Financier) ("CSSF"), 110, route d’Arlon, L-2991 Luxembourg, www.cssf.lu.
1.3 In the event of a conflict between specific agreements or conditions entered into between the Bank and the Client, and, in relation to the
performance of any transaction, the rules and practices of the stock exchanges, markets, clearing and settlement houses and organisations
concerned, as well as the laws and regulations in force in the countries where the transactions are carried out (including rules on consumer
protection) and the General Terms and Conditions, such other provisions shall prevail over the General Terms and Conditions.
1.4
The Client confirms having taken notice of:
(a)
the Appendix to the General Terms and Conditions titled "Markets in Financial Instruments" Conditions (also available on the Bank’s
website), which can be found in Chapter II of the General Terms and Conditions;
(b)
the Appendix to the General Terms and Conditions titled "Risks Associated with Financial Instruments";
(c)
the fees and charges levied by the Bank, of which the Client has received a copy.
These documents shall thus be incorporated into agreements between the parties and form a part of the individual file compiled by the Bank for
each Client.
2.
Rules of Conduct
2.1
In accordance with the applicable regulations following the Financial Supervision Act ("FSA", Wet op het financieel toezicht), the Bank shall apply,
in its relations with the Client, appropriate rules of conduct depending on whether the Client belongs to the Private Client, Professional Client or
Eligible Counterparty category.
2.2Definitions
Private or Retail Client: a client that is not treated as a Professional Client or Eligible Counterparty.
Professional Client: a client who possesses the experience, knowledge and expertise to make the Client’s own investment decisions and properly
assess the risks that the Client incurs. In order to be considered as a Professional Client, the Client must comply with the criteria listed in article 1:1 of
the FSA.
Eligible Counterparty: the entities designated in article 1:1 of the FSA.
2.3
All Clients are considered by default to be Private Clients. They have the right to request to be treated by the Bank as a Professional Client or Eligible
Counterparty. The Bank is not, however, obliged to accede to this request. Categorisation other than as a Private Client shall entail waiver by the
Client of part of the protection afforded to it by the Rules of Conduct.
2.4 Subject to Article 2.3, Private Clients may only waive the protection offered by the Rules of Conduct if:
•
the Private Client has notified the Bank in writing of the Client’s wish to be treated as a Professional Client,
•
the Bank has advised the Private Client clearly and in writing, in a separate document, of the protection and rights to compensation
offered by virtue of the investor protection scheme to which the Client may no longer be entitled,
•
the Private Client has declared in writing, in a separate document, that the Private Client is aware of the consequences of waiving the
aforementioned protections.
The Bank holds specimen documents at the Private Client’s disposal, enabling the Private Client to notify the Private Client’s intention of changing
category and confirm the Private Client’s waiver of the protection provided.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 5
3.
2.5
Before accepting such waiver of the protections offered by the Rules of Conduct, the Bank shall take reasonable steps to ensure, in the light of the
nature of the transactions or services envisaged and by means of adequate assessment, that the Private Client has the experience and knowledge
necessary to enable the Private Client to make his/their own investment decisions and to understand the risks that he/they incurs. In this regard,
the Private Client undertakes to provide the Bank without delay with all relevant information in Dutch or English to enable the Bank to carry out the
necessary assessment.
2.6
The Client undertakes to inform the Bank of the Client’s own agreement and immediately of any change in the Client’s personal circumstances that
affects the assessment carried out by the Bank. The Client shall be liable to the Bank for any harm that the latter may suffer as a result of inaccurate
or incomplete information that they may have received and upon which they have based their assessment.
Information required for the provision of certain investment services
3.1
When entering into a relationship with the Client, and where required in order to carry out a transaction, the Bank shall proceed with the prior
identification of the Client in accordance with the legislation on the prevention of the use of the financial system for the purpose of money
laundering and the directives of the competent prudential authority. Identification of the attorney and/or beneficial owner is also required.
3.2 The Client, attorney and/or beneficial owner must in principle be identified using documents from a reliable and independent source in the
presence of a Bank representative. If justified by special circumstances, the identification may exceptionally be carried out remotely. However, no
transaction involving the disposal of assets credited to the Client's account prior to identification may be carried out until such time as it has been
possible to complete the identification.
3.3 The Client shall provide the Bank, of the Client’s own agreement or upon request by the Bank, with the information and documents necessary to
enable the Bank to fulfil its legal and regulatory obligations. Upon request by the Bank, the Client shall provide the Bank with a Dutch or English
translation, by a sworn translator where applicable, if the Bank considers this necessary. The Client undertakes to inform the Bank of the Client’s
own agreement and immediately of any changes affecting the Client’s personal circumstances, in particular the Client’s capacity, status (marital or
other), domicile, "US Person" status or nationality. The Client shall ensure the most recent versions of the documents requested are provided when
entering into the relationship with the Bank.
3.4 Specifically, Clients wishing to grant a management or advisory mandate to the Bank shall complete and sign the "investment profile questionnaire"
that establishes the Client’s profile. In this regard, the Client confirms that all the information concerning their financial situation, investment
experience, investment aims, and their ability to assess and bear the risks associated with the services offered and with the investments is accurate
and complete and that as a consequence the Bank is not required to check such information, but on the contrary, is entitled to rely on it. Similarly, if
the Client considers that the transactions performed by the Bank, or the advice provided to the Client by the Bank, are not, in the Client’s opinion, in
keeping with the Client’s investment aims or risk tolerance, the Client shall immediately inform the Bank of this in writing.
3.5 The Client shall be liable to the Bank for any harm that the latter may suffer as a result of inaccurate or incomplete information that the Client may
have provided to the Bank concerning the Client’s personal circumstances.
4.Accounts
Upon the Client’s request, the Bank shall open cash accounts and securities accounts in the Client’s name in any currencies.
4.1
Operation of accounts
4.1.1
Unicity of accounts – If the Client is the sole holder or a co-holder of several accounts, whatever their nature, description or name in the
Bank’s books, or their currency, term or the conditions that apply to them, the various accounts, showing a credit or a debit balance, in any
currency whatsoever, shall constitute, de facto and de jure, components or sub-accounts of a single account. If the Client fails to comply
with any undertaking entered into vis-à-vis the Bank, the Bank may, by giving simple notice, merge such sub-accounts and make transfers
from one to another, from debit balance to credit balance and vice versa.
After having been converted, the overall balance shall be secured by the security interest and guarantees attached to one of the
components or sub-accounts. It shall be due immediately, as shall debit interest and charges.
4.1.2
Interrelationship – All transactions that the Client performs with the Bank shall be interrelated. The Bank shall thus be authorised not to
perform its obligations for as long as the Client does not perform any one of the obligations incumbent upon it.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 6
4.1.3
Set-off – In settlement of any claims against the Client, irrespective of their due dates or the currencies in which they are denominated,
the Bank shall be entitled to set off such claims, without formal notice or specific authorisation, against all or some of the Client’s assets
that it holds, directly or indirectly, on behalf of the Client at the Bank or elsewhere in the Grand-Duchy of Luxembourg or abroad. In the
event of an attachment or other provisional or protective measures affecting the Client's assets held by the Bank, it is expressly agreed that
all of the Client's liabilities shall be considered to be due forthwith and that set-off of the Client's liabilities and his/their assets deposited
with the Bank shall be deemed to have taken place prior to the attachment or provisional or protective measure. If necessary, the Bank may
perform such set-off by early liquidation of fixed-term deposits or by selling one or more securities position.
4.1.4
Joint and several liability and undivided co-ownership – All persons who, in any capacity whatsoever (including within a de facto
association), are joint holders of accounts or assets, co-beneficiaries of a credit facility or concerned by the same transaction, shall be
jointly and severally liable to the Bank for all obligations relating thereto. The Client's heirs and beneficial owners shall be jointly and
severally liable for all the Client’s obligations of any nature whatsoever vis-à-vis the Bank.
4.1.5
Cash accounts are current accounts, the statements of which are drawn up at the end of each quarter. As and when transactions
are booked to an account and give rise to credits or debits to the account, the corresponding claims of the Client and the Bank shall
automatically be set off against each other and consequently any request by the Client for repayment may be granted only up to the net
credit balance of the account at any given time.
4.1.6 All amounts received or transfers made by the Bank shall be credited or debited, subject to the limits of the available assets or the
credit granted, to the account opened in the corresponding currency, or, failing this, in the reference currency chosen by the Client when
the account was opened, except where instructions have been given to the contrary. The same rule shall apply to income from and
redemptions of securities. Transaction fees shall be debited in the currency of the transaction in question, except where the Client has
given instructions to the contrary.
4.1.7 Notwithstanding the Bank's other rights, if total orders exceed the available assets or the credit limits granted to the Client, the Bank may
decide, at its discretion, which orders shall be executed, in whole or in part, irrespective of the date on which the orders were given to the
Bank and received by it. Similarly, the Bank shall be authorised to cover any debit balance by using amounts available in other currencies
or on other accounts belonging to the Client. The Bank may also grant a temporary overdraft facility, without the Client having the right to
demand one. In such a case, the balance of the overdraft shall become immediately due and shall bear interest until it is cleared.
4.1.8 The Client's assets denominated in foreign currency shall be deposited with correspondent banks in the monetary zone in question or
outside it, in the Bank's name, but at the Client's risk. Such assets shall be subject to the taxes, duties, restrictions and other measures in
force in the respective countries. Payments shall be made by sale, transfer or the sending of cheques drawn on the Bank’s correspondent
bank in the country concerned or by any other means dictated by the circumstances.
4.1.9 When an amount is credited to an account held by the Client with the Bank on the basis of a money order, a funds transfer notice or as
part of any other transaction, before the Bank has received the corresponding cover, the entry must be understood as having been made
"under reserve" even where this is not expressly stated by the Bank. If the Bank does not receive the funds, the Bank shall be expressly
authorised to debit the unduly credited amount and any charges to the Client's account, at any time, without any time limit being relied
upon against it.
4.2Guarantees
4.2.1
Lien – The Bank has a general lien over all assets belonging to the Client which have been deposited at the Bank or with a third party, in the
Bank's name, on behalf of and at the risk of the Client.
4.2.2
Pledge – The Client pledges in favour of the Bank, which accepts, all financial instruments and precious metals deposited by the Client
with the Bank currently or in the future, as well as all current and future claims in any currency whatsoever, including those resulting from
account deposits with the Bank (the "Pledged Assets"). The Pledged Assets shall serve as collateral for all claims, whether current or future,
contingent or certain, due or not, in any currency whatsoever, held by the Bank now or in the future against the Client, irrespective of
whether or not they are due, their due dates or justification.
The Bank shall be authorised to perform all necessary formalities at the Client's expense with a view to ensuring the creation and
realisation of the pledge.
The Client also undertakes to reply to any request that the Bank may legitimately send to them, including concerning the signature and
issuance of any documents that the Bank considers necessary or useful to the exercise of their rights.
If the Client fails to fulfil one of his/their obligations by the due date thereof, the Bank shall be authorised, without prior formal notice, to
realise the Pledged Assets immediately, in any way, order and within any period that it sees fit, and, in particular, to convert all or part of
the Pledged Assets up to the amount of the Bank's claim plus interest, commission, charges and incidental costs.
The Client and, where applicable, a third-party guarantor, shall remain personally liable to the Bank for any amount remaining due and
unpaid after the pledge has been realised in full.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 7
5.
6.
7.
8.
Number of Account Holders
5.1
If several persons are holders of an account, regardless of the type or name of the account, the accounts shall be either "joint" (joint) or "collective"
(collectif), and the joint and several liability described in Article 4.1.4 shall apply to all such accounts.
5.2 If the Account Holders open a collective account, all of the rights and obligations associated with the account shall vest in each of the Account
Holders, and they may only act vis-à-vis the Bank together or through one or several joint representative(s). Each Account Holder may nevertheless
validly revoke powers granted to a joint representative.
5.3 If the Account Holders choose a joint account, the Account Holders shall be joint and several creditors vis-à-vis the Bank in respect of credit balances.
Consequently, each of the Account Holders of a joint account shall be jointly and severally entitled vis-à-vis the Bank to the total credit balance on
the account. Each joint and several Account Holder may issue any instructions to the Bank alone, without prejudice to the provisions governing the
use of the joint account in practice (in particular as regards authorised signatures and powers of attorney). The Bank shall execute said Account
Holders' instructions in chronological order pursuant to the applicable provisions and agreements. Each Account Holder of a joint account shall be
authorised to terminate the joint and several nature of the account as regards entitlement to credit balances at any time by registered letter sent
to the Bank or a letter hand-delivered against receipt at the Bank, so that the joint account then becomes a collective account for all of its Account
Holders as from the first business day following receipt by the Bank of such notification. The Bank shall inform said Account Holders by letter within
three business days from receipt by the Bank of the aforementioned notice. The death of an Account Holder shall not in itself terminate the joint
and several rights of the Account Holders as creditors, which shall be ongoing between the surviving Account Holders and the heirs of the deceased
Account Holder.
5.4 The rules governing joint and several creditors and those governing joint and several debtors existing vis-à-vis the Bank shall not presume the
existence or the content of any potential joint and several relationship between the Account Holders.
5.5 Except where instructions have been given to the contrary, the Bank shall be entitled to credit the account opened in the name of several Account
Holders with securities received on behalf of only one of them.
Powers of attorney
6.1
The Bank shall provide the Client with private power of attorney forms to enable the Client to grant a mandate to third parties. If a power of
attorney is granted using a document other than the Bank’s power of attorney form, the Bank shall not be obliged to execute the attorney’s
instructions.
6.2 The Client may revoke a power of attorney that it has granted, by registered letter or a letter hand-delivered against receipt at the Bank. Such
revocation shall be effective at the latest on the next business day following its receipt by the Bank. Revocation shall not affect orders in progress.
Signatures and Authority
7.1
Powers of attorney and specimen signatures communicated to the Bank shall be the only ones binding upon the Bank until the Bank is notified in
writing of revocation or any other change. The Bank shall not be obliged to take account of any registrations or publications in the Netherlands,
Grand Duchy of Luxembourg or abroad.
7.2 Damage of any nature whatsoever arising from forgery or a lack of authority that cannot be ascertained by standard checks shall be borne by the
Client, except in the event of gross negligence on the Bank’s part.
Credit facilities
Credit transactions between the Bank and the Client, as well as any third party guarantor, shall be the subject of a separate agreement ("Credit Facility
Agreement"). The specific form and conditions of the Credit Facility shall be determined in the special conditions of the Credit Facility Agreement. In the
event of credit being exceeded, the Article relating to unicity of accounts, set-off, interrelationship of transactions, joint and several liability and guarantees of
these General Terms and Conditions shall apply automatically.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 8
9.Notices
9.1
The Client may communicate with the Bank in Dutch or English, by telephone, fax, postal mail or e-mail or by other means of telecommunication
agreed with the Bank.
The Client shall authorise the Bank to accept the instructions relating to his/their account forwarded by telephone, fax or e-mail (secure or
unsecure), whatever the nature of such instructions and without written confirmation being necessary even if the instruction relates to a purchase
or sale or a transfer to a third party.
9.2 The Client confirms that the Client is aware of the risks associated with the use of these means of communication, in particular risks that may arise
from an error, the duplicate execution of an order, distortion or misunderstanding, the transmission of instructions by an unauthorised person or
forgery; the Client declares that the Client shall henceforth bear all consequences that arise or may arise therefrom and releases the Bank from any
liability.
The Client is aware that e-mails are transmitted via the Internet, a public network over which the Bank has no control and which entails risks.
Accordingly, the identity of the Client and the Bank as users of the Internet, including the content of the exchanges, cannot be kept confidential.
Similarly, the exchange of data between the Client and the Bank may allow third parties to infer the existence of a banking relationship. The Client is
also aware that due to the nature of the Internet network, e-mails may cross borders even if the Client and Bank are located in the same country.
The Bank remains free to request, at its sole discretion, that the principal provide it with the information that the Bank deems necessary in order to
ascertain the principal’s identity. The Bank shall not incur any liability if it refuses to carry out an order given by a person whose identity it does not
believe has been adequately established.
9.3 The Client acknowledges that the instructions transmitted to the Bank are not executed on a continuous basis (24 hours a day), but only on bank
business days, during the Bank’s opening hours, and that there may therefore be a time lag between the receipt of such instructions and their
execution.
9.4 The Bank shall also make a solution available to the Client to enable the Client to consult the Client’s account and communicate with the Bank via a
secure e-mail system, on the basis of an ad hoc contract (E-Services).
9.5 Where written communication is required under the General Terms and Conditions or under specific agreements or other account opening
documents, only postal mail shall be accepted as a valid means of communication.
10.Correspondence
10.1
Durable medium: The Client may choose to receive any documents or information that are to be communicated to it on paper or on a durable
medium other than paper (for example by e-mail or by the documents or information being made available in the Client’s E-Documents folder)
insofar as the provision of such information on said medium is suited to the context in which business is conducted between the Bank and
the Client. The Client shall inform the Bank of the chosen durable medium (paper or other). The provision of information and documents using
electronic means of communication shall be considered to be suited to the context in which business is conducted between the Bank and the Client
provided it has been established that the latter has regular access to the Internet.
10.2 The documents or information issued by the Bank shall be drafted in Dutch or English. The Client accepts that financial documents that exist only
in English may be communicated to the Client in that language, and that documents made available by third parties shall be communicated to the
Client without a translation.
10.3
Client is aware that due to the nature of the Internet network, e-mails may cross borders even if the Client and Bank are located in the same country.
10.4 All written communications sent to the address last indicated by the Client or made available in their E-Documents folder shall be considered to
have been duly sent to the Client. The same applies where the Client has indicated a third party as the mail addressee.
10.5 If there are several Account Holders, Bank notices shall be validly given where they have been sent to one of said Account Holders; the Account
Holders grant each other an irrevocable mandate in this regard.
10.6 In the event of the death of the Client, post shall be validly sent to the last address indicated to the Bank or to the address of one of the Client’s
heirs. The date indicated on the copy kept by the Bank shall be presumed to be the date of sending.
10.7 Where a communication is returned to the Bank indicating that the addressee is unknown at the address given or no longer resides there, the Bank
shall be entitled to retain said communication as well as any subsequent correspondence intended for such Client at the same address in its files,
on the latter's responsibility.
10.8 If the Client does not receive communications within the normal period allowed for receipt, he/they must inform the Bank thereof as soon as
possible.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 9
11.
10.9 The Bank shall be free, but shall not be obliged, to contact the Client at any other place where it thinks that it may be able to reach the Client, using
the means of communication that it sees fit for this purpose, even where there is an instruction to hold mail.
10.10
Where expressly requested by the Client, the Bank may hold correspondence intended for the Client until the Client’s next visit, including reports
and statements that the Bank is required to send to the Client pursuant to applicable regulations. Clients who opt to have their correspondence held
by the Bank accept that reports, statements and other documents shall be held available to them on electronic media. The Client shall be given,
on the Client’s next visit to Bank premises or upon specific request, all documents printed since the last print request. Correspondence held in this
way on electronic media shall be considered to have been sent and received by the Client on the date indicated on the document, i.e. the banking
business day following execution of a transaction or receipt of confirmation of execution of the order by a third party, even if the Client is not aware
of it in person, and even if the correspondence concerns reports, statements or formal notices, or if it involves or refers to time-limits or any other
communication which has or may have, particularly in the event that no reply is given, undesirable effects for the Client or concerns an amendment
to these General Terms and Conditions, the Bank’s tariffs or any other agreement between the Bank and the Client. Any information that the Bank is
obliged to provide to the Client pursuant to existing regulations shall be considered to have been provided on the date of said correspondence.
10.11 When the Client has opted for the Bank to hold the correspondence intended for the Client as indicated in article 10.10, the Client recognises and
accepts that it is his/their choice to have correspondence held by the Bank and the frequency of the Client’s visits shall determine the period
covered by reports and statements relating to the Client’s assets whether managed by the Bank or not.
10.12 Correspondence that has not been collected may be destroyed two years after the date it bears. After such time, the Client may however obtain
copies thereof at the Client’s expense from the Bank’s archives.
Waiver relating to risks inherent in means of communication
The Bank accepts no liability for damages or other consequences that may be caused by the use of postal services, telephone or fax, or any other means of
transmission or transport, or by the non-receipt or lack of knowledge by the Client of communications from the Bank or any other consequences that may
arise from following the Client’s instructions relating to the authorised means of communication, the remittance or holding of their mail or the granting of
a right of inspection, as well as the consequences that may arise from the means of communication used such as, for example, telephone, fax or electronic
means, and the communication or use of a user-name, code, password or a "token" sent by the Bank in the context of remote transactions and consultations.
The Client shall bear sole responsibility for any risks and consequences arising therefrom. In particular, the Bank accepts no liability that may arise for the
Client for any identification error, breach of confidentiality, delay, loss or misrouting or breach of integrity of communications.
12.
Recording of telephone conversations
In order to monitor the authenticity or content of instructions or other verbal communications received from the Client or from the Client’s attorney, the
Client accepts that the Bank may record all telephone conversations between its management bodies, executives or employees on the one hand, and the
Client, the Client’s attorneys or any other third parties on the other hand. In the event of a dispute, the Bank reserves the right to use such recordings as a
means of proof. The Bank may keep such recordings - with observance of regulatory limitations - for as long as it sees fit. Failure to make a recording or to
keep such recordings may not be relied on against the Bank.
13.
Data protection and confidentiality
13.1
In accordance with the applicable legal provisions concerning the protection of the fundamental rights of persons that are the subject of data
processing, the Bank, as the data controller, shall be authorised to process by computer, or any other means, personal data concerning the Client
with a view to fulfilling its obligations of due diligence, executing transactions, managing or administering accounts and for the purposes of credit
rating or statistical analysis, as well as direct marketing, in compliance with the Bank’s legal obligations relating to professional secrecy.
13.2 Any questions concerning access to and rectification of personal data may be directed to the Bank’s Compliance department.
13.3 The Bank hereby informs the Client, who accepts without reservation, that the Bank cannot abstain from communicating information concerning
the Client where such communication is required by a legal or regulatory obligation or by a competent authority. The Client expressly authorises the
Bank to supply such information and insofar as is necessary releases the Bank in this regard from its professional secrecy obligation.
13.4
The Bank shall notify the Client that pursuant to international agreements to which Luxembourg is a party and under the conditions laid down
therein, the information concerning the Client and beneficial owner may be sent to foreign authorities, particularly tax authorities.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 10
14.
13.5 The Client acknowledges that pursuant to Dutch, Luxembourg or other foreign laws and regulations (hereinafter the "Local Regulations"), the Bank
may be required, in connection with the execution of stock exchange or investment orders, to forward confidential data relating to the Client or
beneficial owners of the account to third parties and in particular to the supervisory authorities, tax authorities, local custodian banks or to any
other third party designated by such Local Regulations. Such confidential data may include in particular the surname(s), first name(s), date of birth,
home address and nationality(ies) of the Client and/or the beneficial owner. The Client shall authorise the Bank to forward such confidential data if
it receives such a request.
13.6 The Local Regulations may also require the Bank, in addition to disclosing confidential data, to open a segregated account with a local broker or
custodian. The Client undertakes to provide or sign all the documentation required or withdraw from the investment if that is possible. The Client
notes that such procedures may delay the execution of an investment order.
13.7 Data of a personal nature included in cross-border transfers shall be subject to processing by the Bank and other specialised intermediaries and in
particular SWIFT (Society for Worldwide Interbank Financial Telecommunication). Such processing may take place in centres established in other
European States, in Switzerland and in the United States of America pursuant to local regulations. The consequence, inter alia, thereof, is that the
U.S. authorities may request access to data of a personal nature that is held by such centres, in the context of the fight against terrorism. Moreover,
when the Client gives an instruction to the Bank to make a transfer, the Client hereby expressly consents to all items of information required for the
proper execution of the transfer to be communicated to the processing centre for such transfer, which may be located in Luxembourg or abroad, in
particular in Switzerland, at the Bank’s parent company, Lombard Odier & Cie, Geneva and accepts that such items of information may be subject
to processing outside Luxembourg, in particular by Lombard Odier & Cie, Geneva. The Client has also noted that the Bank may be bound, under the
law of the United States of America, to communicate, in particular upon a request from the Commodity Futures Trading Commission (CFTC) and the
Securities & Exchange Commission (SEC), all details, including the Client's name, relating to futures traded in the United States. Finally, as Lombard
Odier & Cie, Geneva, operates as the payment centre, the data is also stored temporarily in Switzerland for each transfer order.
13.8 The Client confirms that he/they is/are aware that the entrances of the Bank’s offices and branches are equipped with camera surveillance systems.
The camera surveillance systems are installed for the purpose of securing and protecting company property. The Bank shall not use camera
surveillance in a way that is incompatible with the purpose expressly described herein and undertakes to store the images collected in good faith
and in accordance with the purpose described. Any questions concerning access to and rectification of personal data may be directed to the Bank’s
Compliance department.
Duty of verification and claims
14.1
The Client shall keep with all due care the documents and forms received in the course of the his/their dealings with the Bank and shall be liable for
all consequences resulting from their loss, theft or fraudulent use.
14.2
The Client undertakes to:
•
notify the Bank if they have not received communications, notices or statements which must be submitted to them;
•
examine the communications, notices and statements that are sent to them by the Bank;
•
submit specific objections in writing, in the event of a disagreement concerning the transactions performed on their behalf.
14.3
The Client must send, by registered letter to the Bank's registered office, any claim or objection concerning the execution or lack of execution of
instructions of any nature, account statements or extracts and any other communications from the Bank as soon as the document occasioning a
claim or objection is received by the Client or made available in the Client’s E-Documents mail, and in any event no later than thirty days from the
date indicated on the document issued by the Bank or on which such document is made available in the Client’s E-Documents mail, unless a specific
provision provides for a shorter period. If no claim or objection is sent to the Bank within this period, the transactions performed by the Bank, as
well as the statements and other communications, shall be considered to have been definitively approved by the Client.
14.4 Express or tacit approval of a statement of account extends to all transactions included therein and any reservations expressed by the Bank.
14.5 The Bank reserves the right to ask the Client to sign a document certifying the statement of their assets held in account and the transactions
recorded.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 11
15.
The Bank’s liability
15.1Principles
15.2
16.
17.
15.1.1
The Bank, except in the specific cases laid down by these General Terms and Conditions or by specific conditions or agreements, shall only
be liable to the Client in the event of intentional and/or gross negligence committed in the exercise of its professional activities by itself or
by its agents. Except where there are legal provisions to the contrary, the Bank shall not be liable to the Client for simple errors or mistakes
that may occur in the performance (including non-performance or incorrect, incomplete or late performance) of its contractual and/or
extra-contractual obligations with regard to the Client.
15.1.2
If the Bank's liability is incurred, the Bank shall be responsible only for loss of interest unless its attention had been drawn in writing to the
risks of more extensive damage for a given transaction. Nevertheless, any liability of the Bank to the Client shall under no circumstances
give rise to any compensation whatsoever for consequential or incidental damage, of a financial, commercial or other nature, caused by a
mistake or error made by the Bank or its agents (for example loss of profit or clientele, increased costs, disruption to plans, etc.), even if the
Bank had been warned or informed of the possibility of such damage.
15.1.3 Any events of force majeure or any measures taken by Dutch, Luxembourg or other foreign authorities which directly or indirectly affect
the performance of the Bank's obligations shall have the effect of suspending and, where applicable, eliminating the Bank’s obligation to
perform, without the latter being liable for any delay, non-performance or faulty performance.
Liability concerning information and advice
15.2.1
Information, opinions and/or advice, whether commercial, financial, legal, technical or other, shall be provided by the Bank on the basis of
an objective analysis of the data in its possession, and in particular information that the Client has supplied regarding the Client’s personal
situation, objectives, needs and constraints. Such information, opinions and/or advice shall be provided to the Client without guarantees
or liability on the part of the Bank. The information, opinions and/or advice given shall be valid only on the date on which they are
provided, and the Bank does not undertake to update them. Furthermore, they are exclusively intended for the Client's personal use and
the Client undertakes to maintain the confidentiality thereof. They simply constitute background information for the Client and the Client
remains free and responsible for the use that the Client makes thereof and shall be liable for any consequences and risks arising from
decisions that the Client makes.
15.2.2 The Bank recommends that the Client seeks the advice of a legal and/or tax expert established in the country in which the Client’s domicile
or registered office is located. The Bank shall not provide any legal or tax advice and consequently does not assume any liability for advice
relating in particular to the nature and tax consequences of investments or to the administration of the Client's assets by the Bank.
The Client's responsibility in tax matters
16.1
The Client confirms having been made of aware of the Client’s duty to fulfil the Client’s tax obligations (tax return and payment of taxes) vis-à-vis
the authorities of the country or countries in which the Client is required to pay taxes relating to the assets deposited with or managed by the Bank.
Such confirmation also applies, where applicable, to the beneficial owner, and the Client undertakes to inform the beneficial owner.
16.2
The Bank reiterates that the holding of certain assets may have tax consequences, irrespective of the Client’s place of tax residence.
Protection of deposits and financial instruments
17.1
The Bank, pursuant to the law, has taken measures to protect the deposits and financial instruments that it holds for its clients.
As a result, in order to avoid any commingling of assets, the Bank’s records and accounts shall enable it, at any time and without delay, to
distinguish assets held for the Client from assets held for other clients of the Bank and from the Bank's own assets.
17.2 Moreover, where the Bank deposits the Client’s financial instruments with a sub-custodian, it shall ensure that the accounts of such sub-custodian
identify the financial instruments of the Bank’s clients separately from those of the sub-custodian’s clients and from the sub-custodian’s own
financial instruments. The Bank may make general use of the services of Lombard Odier & Cie in Geneva as global custodian, where the Bank’s
clients’ financial instruments shall be sub-deposited in an omnibus account ("Global Clients"). Lombard Odier & Cie in Geneva selects and carries out
a periodic reassessment of its sub-custodian network under strict procedures, the observance of which is subject to an annual certification by the
mandated auditor, which is forwarded to the Bank.
17.3 The Bank is a member of Luxembourg's Deposit Guarantee Association ("Association Pour La Garantie Des Dépôts Luxembourg" - AGDL). The Client
shall thus enjoy the protection extended under the law aimed at establishing a mutual guarantee system, in the event that the Bank becomes
insolvent, covering, up to the amounts established by law, cash deposits (up to EUR 100,000) and claims resulting from investment transactions
(with investor compensation of up to EUR 20,000). The amounts indicated are subject to subsequent revision. The Client should refer to the AGDL
website (www.agdl.lu) for any further information.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 12
18.
19.
Conflict of interest policy
18.1
The purpose of the Bank’s policy for managing conflicts of interest described in Chapter II of the General Terms and Conditions is to define all
the reasonable measures put in place to identify potential conflicts of interest between, on the one hand, the interests of the Bank (including its
management, employees and, where applicable, its tied agents, or any person directly or indirectly linked under a control relationship) and, on the
other hand, its obligations towards each of its clients, as well as potential conflicts between the differing interests of two or more of its clients.
18.2 This policy determines the organisation and administrative measures set up by the Bank with a view to taking all reasonable steps to prevent such
conflicts of interest from adversely affecting the interests of its clients.
18.3 The Bank may also act as a counterparty on its own account in the context of managing its own trading portfolio. Procedures are in place to protect
its clients’ interests.
18.4 The measures put in place are appropriate with regard to the Bank's size and organisation and to the nature, scale and complexity of its business.
As a result, the Bank shall ensure in particular that a separation of duties is established between those involved in investment research, advice,
management and the negotiation of conditions with its commercial partners. Furthermore, the Bank shall also ensure that any advice furnished by
it, particularly on the basis of securities selected by its analysts, is independent of any consideration of commission to be received by the Bank.
18.5 The Bank assumes an obligation of means and not an obligation of results. Consequently, if the organisational and administrative measures in place
are not sufficient to ensure, with reasonable confidence, that the interests of clients will not be adversely affected, the Bank shall clearly disclose to
its clients, before undertaking business on their behalf, the general nature, where applicable, of the source of conflicts of interest in order to obtain
their express consent to proceed with the transaction.
18.6 The Bank shall keep a record of all services and transactions undertaken by it in accordance with the regulations in force in order to ensure the
monitoring of its obligations in respect of the management of conflicts of interest.
Tariffs, charges and interest
19.1 The Client acknowledges having been informed of and accepts the tariffs and charges set out in the "Tariffs and Charges" annex described in Article
1.4 (c). These tariffs may be modified by the Bank, which shall inform the Client of such modification by whatever means it sees fit.
19.2 Furthermore, the Bank informs the Client that, unless agreed otherwise, the following provisions shall apply:
(a)
accounts in EUR and foreign currencies shall not bear credit interest;
(b)
the debit interest rate shall be applied automatically, without prior formal notice, on debit balances, without prejudice to inherent closing
costs. This rate is set by the Bank based on market conditions by increasing the rate applicable to prime borrowers by a margin of up
to ten per cent (10%). This provision may not be construed as authorising the Client, in any manner whatsoever, to be overdrawn on
their account. The Bank reserves the right to alter the debit interest rate to take into account, in particular, any amendments to laws or
regulations, as well as market practice and market conditions, including those related to the Client and to the Bank’s policy. The Bank shall
seek to keep the Client informed of any changes in rates in such manner as it sees fit. Debit interest to be paid on current accounts shall be
invoiced on a quarterly basis;
(c)
in the event of non-payment within 30 days of the due date, the Bank shall charge the applicable interest rate increased, by way of a
penalty clause, by two per cent (2%) without prior notice or notification as well as lump-sum compensation for extrajudicial collection fees
of ten per cent (10%) of the sums due and owing, it being specified that such compensation does not include interest, commission, fees
and compensation other than extrajudicial collection fees such as court costs and lawyers’ fees and expenses;
(d)
when calculating credit or debit interest, the Bank shall, in accordance with customary banking practice, take into consideration the value
dates, which may differ depending on whether they relate to deposits or withdrawals;
(e)
the Bank shall be authorised to debit the Client's account with all disbursements, fees, costs, commissions, custodian and broker fees,
interest, taxes, duties or other charges incumbent upon it or that are invoiced to it in the Grand Duchy of Luxembourg or abroad by its
correspondent banks. Said amounts shall be due to the Bank net of any charge. Any withholding tax or other contributions shall be paid by
the Client. If applicable, a higher amount shall be paid so that the Bank receives the correct net amount;
(f)
the Client shall bear the correspondence, communication and search costs as well as all of the costs incurred on the Client’s behalf or
associated with a measure taken by a third party against the Client. All judicial and extrajudicial costs (in particular attorney’s fees and
process server costs) that the Bank bears with respect to searching for new addresses of the Client or any other contact person, the
recovery of a debit balance, or the registration, establishment and enforcement of security interests shall be chargeable to the Client.
Other costs chargeable to the Client shall be charged on the basis of the rates in force and according to the type of transaction.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 13
20. Calculation of time-limits
Periods and time-limits are generally calculated using calendar days, except where stipulated to the contrary. Periods and time-limits calculated in months,
quarters, half-years or years shall be calculated from a given day in one period to the day before the corresponding day in the next period. However, annual
interest, where applicable, shall be calculated on the basis of the actual number of days divided by 360 (or 365, as the practice may be). Where periods and
time-limits expire on a public holiday, their expiry shall be postponed to the first business day thereafter. Business days shall be days on which banks are
generally open for business in the Netherlands and public holidays shall be days on which banks in the Netherlands generally are closed. Saturdays and
Sundays shall always be considered to be public holidays.
21.Outsourcing
Within the framework of and under the conditions laid down by laws and regulations, the Bank reserves the right, if it deems it useful or necessary, to
delegate on a temporary or permanent basis to one or several companies or entities affiliated to it, or to third persons or companies, in Luxembourg or
abroad (including in Switzerland and outside the European Union), the provision of some services that are inherent in its activities, for example in the
following areas (the following list is not exhaustive): transactions, custodianship and administration of shares and securities, IT media and programs,
accounting and other back office activities. In such case, except for portfolio management and except where there are legal provisions to the contrary, in the
event of errors, omissions or improper execution by such third parties the Bank shall be liable only for the care with which it has chosen and instructed the
latter parties, it being understood that this does not mean, however, that the Bank is released from its liability in the event of intentional or gross negligence.
22.
Civil incapacity and death
22.1 The civil incapacity or death of the Client must be notified to the Bank. As long as the Bank has not received such notification, the Bank shall not
be held liable for transactions executed by co-Account Holders or attorneys after the time of death or after the civil incapacity of the Client has
occurred.
22.2 In the event of the civil incapacity or death of the Client, the representatives of the incapable Client or the heirs of the deceased Client, and any
other persons authorised to represent the incapable Client or the heirs of the deceased Client, must provide proof of their status by means of
appropriate documents establishing their rights.
22.3 Except where there is an explicit provision to the contrary, mandates and powers of attorney granted by the Client to the Bank or to third parties
concerning relations between the Bank and the Client shall not terminate with the civil incapacity or death of the principal. They shall remain valid
until the business day following receipt by the Bank of a written revocation by the Client, or, in the event of incapacity or death of the Client, by a
representative of the incapable or deceased Client, without prejudice to the execution of transactions in progress.
22.4 Pursuant to Article 1939 of the Civil Code, after the Client's death, the attorney(s) must certify in writing to the Bank that he(they) has(have)
informed the Client's heirs of the existence of the mandate and indicate to the Bank the identities of the heirs that have been informed.
23.Assignment
Only the Bank shall be authorised to assign all or some of its rights and obligations, including as part of a restructuring (by contribution of assets, transfer,
merger, demerger, change of control or other), with no change to the conditions governing its relationship with the Client or loss of the security interests
relating thereto, which are expressly reserved.
24.Proof
24.1 Regardless of the nature or amount of the legal act to be proved, the Bank may in all cases, in a civil or commercial matter, provide evidence by
means of a copy or reproduction of the original document (including, if applicable, a reproduction of an electronic communication). Except where
proof to the contrary is provided by the Client, the copy or reproduction shall have the same probative force as the original.
24.2 The Bank shall keep its books, accounting entries, correspondence and archives in original form or, as it shall decide at its own discretion, in the form
of stored data, for a duration of ten years from the end of the calendar year during which a document was drawn up or received.
24.3 Clients wishing to receive information or a copy of supporting documents must tender a request before expiry of the ten-year period. Search costs,
detailed in the tariff list, shall be borne by the Client.
24.4 Books and documents, including the Bank's micrographic reproductions and computer records, shall be considered as being probative until proof is
provided to the contrary.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 14
25.Amendments
The Bank reserves the right to amend these General Terms and Conditions at any time, as well as the other documents mentioned in Article 1.3 and forming
part of the Client's file, particularly in consideration of any legislative or regulatory changes, as well as market practice, the market situation and the Bank's
policy. The Bank shall inform the Client of any amendments, by any appropriate means, including via the Bank’s website or through periodic statements sent
out to the Client. Amendments shall be deemed to have been accepted by the Client unless the latter contests them in writing within two months of said
notification.
26. Termination of business relationships
26.1 Except where there are provisions to the contrary, the Bank and the Client may each terminate their relationship at any time, subject to the
execution of orders in progress, which shall not be affected. If the decision to terminate the agreement was at the initiative of the Client, it shall
take effect immediately, while if the Bank takes the decision to terminate the agreement, the latter shall be terminated as regards any payment
transactions upon two months’ notice in writing or on any other permanent medium. In particular, the Bank reserves the right to avail itself of this
provision if the Client does not fulfil their identification obligation as described in Article 3.1.
26.2 In the event of the termination of the business relationship, the Bank reserves the right to terminate all credit facilities. Mutual claims shall become
due immediately and the provisions of Article 4 shall apply. The Bank shall also be entitled to convert the balances of accounts into one or several
currencies and to place the resulting balance at the Client's disposal by any means of payment that it chooses. It may in particular, without at any
time being obliged to do so, decide to issue a cheque drawn on the Bank itself or a correspondent bank. Such cheque may, at the Bank’s discretion,
be sent to the last address indicated for correspondence or to the Client's last known address.
26.3 For assets other than sums of money, the Bank shall be released from all its obligations once it has sent notice informing the Client that the assets
concerned are at their disposal at the Bank’s or one of its correspondent banks’.
26.4 If the Bank, instructed by the Client, has entered into undertakings from which it cannot extricate itself or if the Client was the holder of a credit
card or has placed cheques or bills of exchange in circulation, the Client must make a deposit with the Bank in the currency of the undertaking and
for the maximum amount of the undertaking as determined by the Bank at its own discretion. The deposit shall remain pledged to the Bank until
the undertaking has been completely discharged.
26.5 On the date on which contractual relations come to an end, the Bank shall be free to refuse any transaction on the account and sums credited to the
Client’s account shall, if applicable, cease to generate interest.
26.6 Irrespective of a general termination of the relationship with the Client, the Bank may at any time demand that credit granted be repaid, terminate
any suretyships or other guarantees supplied in the Client's favour or cancel lines of credit if it becomes aware that the Client's solvency is
compromised, that the security interest obtained are insufficient or if the security interest requested have not been provided, or if it becomes
aware that its liability may be incurred by continuing its relations with its Client or that the Client's transactions are few in number or appear to be
contrary to public policy or to the Bank's policy, or if the Client has not fulfilled any obligation incumbent upon it.
27. Applicable law and jurisdiction
All relations between the Client and the Bank shall be subject exclusively to the laws of the Netherlands, unless explicitly stipulated by the Bank otherwise
or unless mandatory prescribed otherwise by Luxemburg law. The competent court in Amsterdam shall have sole jurisdiction over any disputes between the
Bank and the Client.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 15
II. Payment services
28.Principles
This chapter applies to the use by the Client of his/their account for payment transactions credited or debited to such account. Payment transactions are acts
initiated by the payer or payee of placing, transferring or withdrawing funds, irrespective of any underlying obligations between the payer and payee. Where
they relate to the provision of such payment services by the Bank in the European Union or the European Economic Area in EUR or in a currency of a European
Union or European Economic Area Member State, they shall constitute regulated payment transactions. The Client may, at any time, request the Bank to
provide the payment services general terms and conditions in paper or electronic format. This chapter also describes the principles governing the provision
of payment services in connection with unregulated payment transactions.
29. Receipt of payment orders
The Bank must be in receipt of regulated payment orders from the Client before 3 p.m. on a business day; unregulated payment orders must be received
before 11 a.m. If received later than the prescribed time, the Bank shall process orders according to the "best effort basis" principle, and where such orders
cannot be processed by the Bank, where applicable, the order shall be deemed to have been received by the Bank on the following business day. Unless
otherwise specified by the Bank, if the Bank receives a payment order on a day which is not a business day, the order shall be deemed to have been received
by the Bank on the following business day. The Bank considers business days to be the days of the week from Monday to Friday, with the exception of public
holidays and other days on which banks are closed.
The Client may obtain information relating to the execution date of orders, which may vary depending on the currency in question.
30. Consent
A payment transaction is deemed to be authorised if the Client has consented to the execution of the payment transaction prior to or after its execution, as
agreed between the Client and the Bank. The form and procedure through which the Client shall give his/their consent shall be determined by the Bank. In
the absence of such consent, the payment transaction shall be considered to be unauthorised. The Bank shall be authorised to correct incorrect entries on
the Client’s payment account. The Bank shall be authorised to refuse a payment if the data are incomplete or incorrect or pursuant to a legal or regulatory
obligation. If a payment transaction is refused, the Bank shall immediately inform the Client of such refusal.
31. Correction
31.1 If the Client becomes aware that an unauthorised or incorrectly executed payment transaction has been performed on his/their account, the
Client may have it corrected only if the Client informs the Bank of this without delay and in any event within the 30 days following the debit date,
or within 13 months in the case of a regulated payment transaction. Losses relating to any unauthorised payment transactions resulting from the
use of a lost or stolen payment instrument or, if the Client has failed to keep the personalised security features safe, from the misappropriation of a
payment instrument, shall be borne by the Client up to a maximum of EUR 150.
31.2 The Client shall bear all losses relating to any unauthorised payment transactions if the Client incurred such losses by acting fraudulently or
with intentional or gross negligence in the performance of the Client’s obligations to use the payment instruments pursuant to their terms and
conditions and to inform the Bank without delay as soon as the Client becomes aware of the loss or theft or of any unauthorised use thereof.
31.3 Where the Bank has been informed of an unauthorised payment transaction and the absence of authorisation is confirmed by the Bank’s
investigation - which may not extend beyond a period of three business days - it shall immediately refund the Client, without charge, the amount of
such unauthorised payment transaction and, where applicable, restore the payment account debited to the position in which it would have been
had the unauthorised payment transaction not taken place.
32. Exchange and interest rates
The Bank shall convert into the currency of the payment account the amounts that must be debited or credited to such account and which are not in that
currency. Such conversion shall be carried out on the basis of the exchange rate set by the Bank at that time. If interest is payable, it shall be calculated on
the basis of the rate set by the Bank. Changes in exchange and/or interest rates shall be adopted with immediate effect and without prior notice to the Client
when the exchange and/or interest rates are based on an information source to which the Client has access. The exchange and interest rates are available on
request on a durable medium from the Bank.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 16
33. Execution of payment orders
33.1 The Bank shall ensure, when it receives a regulated payment order from the Client, that the payee’s payment service provider receives the funds
by the end of the next business day. The Bank shall inform the Client of the information the Bank requires in order to execute the payment orders,
including a unique identifier allowing for the unambiguous identification of the other payment service user and/or his/their payment account.
33.2 For all other payments and in the absence of a special agreement or legal or regulatory provision to the contrary governing these matters, the
agreed execution time for a payment transaction is the first possible business day, depending on the currency, following the acceptance date of the
payment order by the Bank.
33.3 The Client may however revoke the payment order in the case of direct debits and without prejudice to the right to refund, no later than 3 p.m. on
the business day preceding the day agreed for debiting the funds. The Client may also revoke the payment order where it has agreed with the Bank
that execution of the payment order shall start on a specific day or at the end of a certain period or on the day on which the Client has placed funds
at the Bank’s disposal, no later than 3 p.m. on the business day preceding the agreed day. After these deadlines, the payment order may be revoked
only by agreement between the Client and the Bank.
33.4 Where the Client is the payee of a regulated payment transaction, the credit value date shall be the business day on which the amount of the
payment transaction is credited to the Bank’s account by the payer’s payment service provider.
For all other payment transactions and in the absence of a special agreement or legal or regulatory provision to the contrary governing these
matters, the credit value date shall be no later than the third business day following the business day on which the amount of the payment
transaction is credited to the Bank’s account by the payer’s payment service provider.
33.5 Where the Client is the payer of a regulated payment transaction, the debit value date shall be the business day on which the amount of the
payment transaction is debited to such payment account.
For all other payment transactions and in the absence of a special agreement or legal or regulatory provision to the contrary governing these
matters, the debit value date shall be no earlier than the third business day preceding the business day on which the amount of the payment
transaction is debited to the Client’s account.
34. Refunds
If the payee of a payment order ordered by the Client has not received the funds in due time, the Bank shall be authorised to debit this sum to the Client’s
account only if it can prove that the payment in question has reached the payee’s payment service provider. In all other cases, the Bank shall be required to
refund any debits to the Client’s payment account on the debit date.
35. Lack of verification
35.1 For the purposes of executing a regulated payment order, the Client undertakes to provide the Bank with the payee’s account number in IBAN
format as well as the BIC/SWIFT code. As regards the execution of payment orders for which the account number is indicated in a format other than
IBAN, or for which the account number does not exist in IBAN format, the Client must, on the Client’s sole responsibility, provide the Bank with, in
addition to the name of the payee, all information necessary to allow the payee’s account and bank to be identified. The IBAN, or the information
necessary to allow the payee’s account and bank to be identified, shall be used by the Bank as a unique identifier.
35.2 The Bank shall not be obliged to verify the accuracy of the data (unique identifier) indicated on the Client’s payment order. The unique identifier
specified by the Client shall be considered by the Bank to take precedence when executing the payment order.
35.3 If the unique identifier provided by the Client is incorrect, the Bank shall not be liable for non-execution or defective execution of the payment
transaction within the meaning of Article 36. However, the Bank shall make reasonable efforts to recover the funds involved in the payment
transaction. The Bank shall be entitled to charge the Client for this.
35.4 The Bank reserves the right to reject a credit transfer to the Client’s account if the data transmitted by the instructing party’s bank is unclear or
incomplete. If the requested information is not received, the Bank may return the funds to the instructing party’s bank.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 17
36. Defective execution of payment orders
36.1 The Bank shall be liable if a payment order is not executed correctly, unless:
(a)
the Bank can prove to the Client and, where applicable, to the payee’s payment service provider, that the payee’s payment service provider
has received the amount of the payment transaction;
(b)
the Bank is subject to an event of force majeure;
(c)
correct execution of the payment order would cause the Bank to breach the law.
36.2 The Bank shall not be liable for any consequential damage suffered by the Client, except in the case of gross negligence on the Bank’s part.
36.3 The Bank shall not accept any liability in the event that a payment to a third party is blocked by a correspondent bank, particularly due to the antimoney laundering and counter financing of terrorism rules to which the correspondent bank is subject. In such case, it shall be the responsibility of
the Client to assert his/their rights.
37. Payment transaction initiated by or through the payee
The Client accepts that any standing order that it has already issued in favour of a third party shall remain in force if a European direct debit is used. A
European direct debit is a direct debit in euros made within the Single Euro Payments Area ("SEPA"), which consists of the European Union member states
and the other SEPA member countries, between accounts held by the participating banks.
38. Requests for refunds of payment transactions initiated by or through the payee
38.1 In the eight weeks following the date on which the funds are debited for the execution of a regulated payment transaction, the Client may
request the Bank to refund the amount collected following the execution of a payment transaction initiated by or through the payee only if the
authorisation did not specify the exact amount of the payment transaction and if the debited amount exceeded the amount the Client could
reasonably have expected taking into account his/their previous expenditure patterns.
38.2 Within a period of ten business days of receiving a request for refund, the Bank must either refund the full amount of the payment transaction
or provide justification for refusing the refund, informing the Client that the Client may refer the matter to the CSSF if the Client does not accept
the justification provided. In the absence of a valid standing order, the Client may request the Bank to refund the amount debited from his/their
account, if it informs the Bank of this without delay and in all cases within 13 months following the debit date.
38.3 The Bank shall verify only whether the direct debit payee is able to demonstrate that there is a valid standing order. Failing this, the Bank shall
return the amount of the transaction in question to the Client without delay and restore the debited payment account by reversing the transaction
on the account.
38.4 There is no right of refund for unregulated payment transactions.
39. Blocking and cancellation of orders
The Client shall be entitled at any time to (i) request his/their account to be blocked for any payment transactions initiated by or through the payee or for
a transaction for a specific payee, or to (ii) cancel a standing order payment instruction. The Client must inform the Bank of this no later than 3 p.m. on the
business day preceding the date on which the Client’s account is to be debited for the standing order.
40. Freezing of accounts
The Bank shall be entitled to freeze the Client’s payment account if it suspects unauthorised or fraudulent use of the account or if it considers that the Client
is not able to fulfil his/their payment obligations resulting from the use of the account.
41. Information
All of the information relating to payment service charges may be obtained from the Bank on paper or on another durable medium. In addition, the Bank
shall provide the Client with a statement of the payment transactions credited and debited to his/their payment account, according to the frequency
determined by the Client, as determined by law.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 18
Out-of-court appeals and complaints: the Netherlands Authority for the Financial Markets is the competent body for receiving appeals from clients for
payment services. The Financial Services Complaints Institute (Klachteninstituut Financiële Dienstverlening, KiFID) may also intervene between providers and
individuals for the purposes of settling such complaints amicably. De Bank is member of the Financial Services Complaints Institute (www.kifid.nl).
Payment service users and any other interested party, including consumers’ associations, may submit appeals to the Netherlands Authority for the Financial
Markets in the event of any breaches of the provisions of the Act on Financial Supervision governing payment services.
This procedure shall be without prejudice to the right of appeal before the courts as specified in article 28 above, on ordinary courts.
III. Safekeeping of financial instruments and investment services
42. Custodianship of shares and securities
42.1 The Bank shall be authorised to hold financial instruments deposited on the behalf and at the sole risk of the Client in custody at correspondent
banks or central securities depositories or clearing systems chosen by it in Luxembourg or abroad. The Bank shall choose the correspondent banks,
central securities depositories or clearing systems with due care and diligence.
The Bank shall inform the Client, who accepts, that the correspondent banks, central securities depositories or clearing systems chosen by the
Bank may deposit the Client's financial instruments with third parties pursuant to selection criteria that are not necessarily the same as the Bank’s
selection criteria.
If the Bank is required, because of the nature of the financial instruments, to deposit them with a sub-custodian abroad that is not subject to
adequate supervision, the Bank shall not be held liable.
Where assets, receivables or claims owned or held by the Client directly or through the Bank involve foreign regulations, the Bank's correspondent
banks, central securities depositories or clearing systems in the Grand Duchy of Luxembourg or abroad, the Client's rights shall also be subject to the
laws, practices, rules and conventions applying to such correspondent banks, central securities depositories or clearing systems as well as relations
with foreign authorities, leading, where applicable, to the granting of certain privileges and interests over the financial instruments deposited with
them.
The Bank shall ensure that the Client’s financial instruments are kept separate from those of the Bank when it deposits them with third parties, it
being specified that the Client's financial instruments may be held by the Bank in omnibus accounts held with third parties that do not allow the
Client's financial instruments to be separated from financial instruments belonging to other clients of the Bank deposited in the same account.
The holding of the Client's financial instruments in omnibus accounts abroad shall be subject to local rules. It is likely that the Client will not have a
personal claim on financial instruments deposited in this way with third parties.
Where financial instruments are deposited with correspondent banks, central securities depositories or clearing systems selected by the Bank,
the latter shall only be liable for gross negligence in the selection of such third parties. The Bank shall accept no liability in the event of the loss or
non-return of financial instruments due to actions or omissions of such correspondent banks, central securities depositories or clearing systems
or in the event of their insolvency. If identical financial instruments held for the Bank in an omnibus account abroad are returned to the Bank in an
insufficient number to meet its clients' claims, the Bank shall be entitled to reduce its clients' claims pro rata to the financial instruments returned
by the third party.
Any obligation of the Bank shall be subject to effective receipt by the Bank on the Client's behalf of payment or delivery by the correspondent
bank, the central securities depository or the clearing system. The Bank shall be authorised to debit the Client's account automatically with the
value of the Client’s assets, receivables and claims that it has paid and for which payment or delivery by the correspondent bank, the central
securities depository or the clearing system has not been received within the normal timeframes, as well as with all charges and currency exchange
differences.
In all cases, the Bank may release itself from its obligations by transferring to the Client the rights that it holds against the correspondent bank,
central securities depository or clearing system.
All charges, commission, taxes, duties and other withholdings applied or incurred in relation to the foregoing shall be paid by the Client.
43.2 Except where the Client issues instructions to the contrary, the Bank shall be responsible for the normal administration of securities transactions.
Where the printing of certificates is deferred, the Bank shall be authorised to have existing securities certificates converted to book-entry rights, to
carry out normal administrative activities while the securities are held in book-entry form, to give the issuing company all necessary instructions, to
obtain essential information from the latter and to demand issue of the paper securities at any time.
42.3 The Bank shall send the Client an annual statement of the financial instruments and assets that it holds on the Client’s behalf.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 19
43. Client representation
43.1 The Bank shall not be obliged to communicate to the Client the dates on which ordinary or extraordinary general meetings of the companies for
which it holds shares on deposit on the Client's behalf are held, nor the items concerning which resolutions are to be made during such meetings.
The Bank shall agree to represent company shares or units that it holds at ordinary or extraordinary general meetings, directly or through a
representative that it has designated, only if a specific mandate, expressly accepted by the Bank, has been granted by the Client for this purpose.
Failing this, it will not undertake any action or exercise any voting rights attached to shares or units deposited by the Client with the Bank.
43.2 Notwithstanding the foregoing paragraph, the Client grants the Bank a special power of representation at ordinary and extraordinary general
meetings of undertakings for collective investment (UCIs) of the Lombard Odier Group, structured in the form of companies, in which the Bank
holds shares on deposit on the Client's behalf. Notices concerning such ordinary or extraordinary general meetings shall be published according to
the means of publication required for each undertaking for collective investment. In the absence of instructions to the contrary given in due time by
the Client, the Bank shall vote in line with proposals made by the board of directors of those companies.
44. Investment services
For all stock exchange orders, whether relating to financial instruments incorporated in a title or not, the Bank shall act, in principle, as a commission agent,
meaning that it shall act in its own name, but on behalf of and at the risk of the Client. For certain specific orders, the Bank reserves the right to act in the
Client's name, with the latter's authorisation. Within the limits set forth by the law, the Bank may act as the Client's direct counterparty insofar as this is
not to the detriment of the latter. The purchase and sale of securities shall take place pursuant to these General Terms and Conditions and on the basis of a
discretionary portfolio management mandate entered into by the Client and the Bank, or upon specific instructions from the Client.
45. Instructions issued to the Bank
45.1 Orders sent to the Bank must clearly state the purpose and terms, as the case may be, of the transaction to be carried out and the Bank reserves the
right not to execute orders or instructions considered to be unclear or incomplete.
45.2 If the instructions given by the Client to the Bank comprise only execution and/or reception and transmission of orders, and the Bank does not have
the information required to determine whether such orders are appropriate, the Bank may provide the services requested only if all the conditions
laid down in applicable regulations have been met.
45.3 The Bank also reserves the right not to execute instructions where it has a doubt regarding the Client's knowledge of the specific instruments at
issue, and/or to suspend instructions until such time as the Client has consulted certain explanatory documents or met a Bank representative for
further details.
45.4 In other cases than those provided in the article 45.2 above, the Bank must determine whether instructions received from the Client are appropriate
for the Client considering the information received in application of the Article 3.4 above and inform the Client if this is not the case or if the
necessary information is not sufficient. Then, the Client will be able to cancel or confirm the instructions. If the Bank was not able to contact the
Client according to the modalities previously agreed with him, the Bank shall not execute the instructions received.
45.5 The Client expressly waives the requirement for the Client’s orders to be executed on a regulated market or a multilateral trading facility ("MTF"),
if the Bank considers that execution outside such a market or MTF is compatible with the principle of best execution in the interests of the Client
pursuant to the Bank's policy in this regard.
45.6 Report: The Bank shall send the Client a statement, on a durable medium, confirming execution of the order. This advice sent to the Client shall
include the essential information relating to such execution and shall be sent at the latest on the first business day following execution or following
receipt of the advice of execution received from a third party. Upon request by the Client, the Bank shall inform the Client of the execution status of
the Client’s order.
46. Stock exchange regulations
46.1 The purchase and sale of securities carried out through the Bank shall be subject to the laws and practices of the respective stock exchanges. The
Client shall be obliged to comply with such laws and practices, which shall be enforceable against them, and insofar as necessary, the Client shall be
obliged to cooperate.
46.2 The Client further acknowledges that due to applicable stock exchange regulations, the Bank may impose margin requirements and/or position
limits, and the Client undertakes to comply therewith by providing the required funds upon the Bank’s first request.
46.3 The Client acknowledges that certain stock exchanges impose position limits and undertakes to comply therewith in respect of the Client’s overall
position, irrespective of whether the Client’s transactions are processed through one or several banks.
46.4 Furthermore, it is the sole responsibility of the Client to take all necessary measures to comply with legal obligations in Luxembourg or abroad
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 20
concerning financial instruments that the Client holds on deposit with the Bank, particularly as regards reporting the crossing of shareholding
thresholds in the share capital of listed companies provided for by law or the companies’ articles of association. The Bank does not accept any
liability in this respect. If applicable, the Client undertakes to hold the Bank harmless in respect of any damage suffered by the Bank and/or its
clients following any breach by the Client of its legal obligations.
46.5 If thresholds are crossed, the Client authorises the Bank, upon a request made by a stock exchange, the issuer or a supervisory body, to transmit the
Client’s identity and position(s). However, the Bank reserves the right to contact the Client before transmitting this information.
47. Measures incumbent upon the Client relating to securities transactions
Save where agreed to the contrary, it is the Client’s responsibility to take all necessary measures to protect the rights attached to securities on deposit, in
particular to give orders to exercise or sell subscription rights, to exercise option rights, to make payments for shares that are not fully paid-up or to make
conversions. In the absence of an order from the Client, and depending on the Client's presumed intentions, the Bank shall nevertheless be authorised to act
for the best without incurring any liability in this regard.
48. Information on the nature of and risks associated with financial instruments
The Bank has informed the Client about the nature of and risks arising from transactions in financial instruments in the appendix to these General Terms
and Conditions titled "Risks Associated with financial Instruments" that has been delivered to the Client and which forms an integral part hereof. The Client
confirms that it has taken note thereof and declares that it is aware of and accepts the risks relating to the execution of such transactions.
49. Release from liability concerning high-risk investments
49.1 Principle
Where the Client carries out high-risk investment transactions, the Client undertakes to take the necessary precautions, in particular to analyse
carefully whether such investments are appropriate to the Client’s personal situation in terms of experience, knowledge and investment aims as
well as the characteristics of the financial instruments, and to seek the necessary advice before making such investments.
The Client is aware and accepts that the execution of such transactions may change the composition of the Client’s portfolio and thus affect the
Client’s compliance with the Bank's investment policy.
The Client confirms that it is aware of the risks associated with the execution of such transactions and accepts them. The Bank shall therefore be
released from any liability in the context of transactions that it performs in the execution of the general or specific instructions relating to such
investments.
49.2 Investments on emerging markets
(a)
Description of emerging markets
Emerging markets are stock markets located in countries with one or several of the following characteristic(s): political instability,
uncertain financial markets and economic development, financial markets under construction, a weak economy. The list of emerging
countries, which is subject to amendment, comprises all countries with the exception of the following: Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Great Britain, Hong Kong, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway,
Portugal, Singapore, Spain, Sweden, Switzerland and the United States.
(b)
Risks
Investments on emerging markets involve increased risks and are often of a speculative nature. They must be made solely by persons with
thorough knowledge of such markets, who are thus able to assess the multiple risks, and who have adequate financial resources to bear
the substantial risks involved in such investments.
(c)
Undertakings of the Client
When the Client authorises the Bank to invest in the emerging markets, the Client understands and accepts the risks resulting from these
type of investments.
If the Client gives instructions to the Bank to invest in emerging markets, the Client shall confirm that:
(i)
the Client has examined all legal and promotional documents relating to emerging markets on the basis of which it has decided,
on his/their own initiative, to invest;
(ii)
the Client has sufficient knowledge and experience in the financial field to assess the risks associated with such investments;
(iii)
the Client has carefully analysed whether the investment is appropriate, in the light of the Client’s personal circumstances and
financial resources;
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 21
(iv)
49.3
the Client has the necessary knowledge or has consulted the Client’s own advisor as to the tax implications of investing in
emerging markets in view of his/their own specific situation.
Risks associated with investments in private equity, hedge funds and offshore funds ("high-risk funds")
(a)
Description of high-risk funds
Private equity funds are collective investment vehicles, whatever their legal form or country of incorporation, which invest in companies
that are not listed on a stock exchange or other regulated market and which are illiquid.
Hedge funds are collective investment vehicles, whatever their legal form or country of incorporation, which implement non-traditional
investment strategies, such as, for example, the use of derivative instruments, short selling and/or borrowing. Such funds may have a
significant level of leverage.
Offshore funds are collective investment vehicles, whatever their legal form or country of incorporation, domiciled in countries in which
collective investments are not subject to the same level of supervision as in Luxembourg.
(b)
(c)
Risks
(i)
Economic risk: high risk funds often require high minimum investments and involve significant financial risks, including the
risk of losing all the assets invested. The commission structure in high-risk funds is generally more complex and involves higher
commissions than traditional investments. Furthermore, high-risk funds may still be under development and may not yet
generate a profit, or may be exposed to significant losses. It may be that they are not subject to diversification requirements and
may be highly exposed to technological developments, to commodity prices and to the environment in which they operate;
(ii)
Legal risk: high-risk funds may be established in legal jurisdictions in which an authority exercises only limited supervision or in
which no regulatory supervision is exercised and where the transparency requirements are weak or non-existent, entailing less
protection of investors' interests. High-risk funds are not, and will not be, registered with the CSSF as investment undertakings
governed by foreign law. Some high-risk funds also require extensive guarantees from the investor prior to any subscription.
The prospectuses, financial statements and the clauses of the subscription agreements are often complex and the Bank will not
examine the prospectus, financial statements or subscription agreement relating to the shares or units that the Client wishes to
purchase and nor will it carry out any control or verification concerning the envisaged subscription;
(iii)
Operational risk: for some high-risk funds, the operational systems and control procedures put in place may be weak or
inadequate and lead to losses. Risks may also arise due to a lack of transparency of the investments made. Where investments are
made indirectly, counterparty risks should also be taken into account (administrator, custodian etc.);
(iv)
Lack of liquidity: investments made by high-risk funds may be illiquid and may not allow redemption requests to be honoured
promptly. High-risk funds also generally plan for long lead times concerning subscription and redemption, as well as periods
during which their shares or units cannot be redeemed (lock-up periods). With private equity funds, the lock-up periods can be as
long as several years;
(v)
Valuation risk: the valuation of some high-risk funds is delicate and subject to necessarily subjective assessments in the absence
of a true market for the shares or units of such funds. Consequently, the valuation may be inaccurate;
(vi)
Capital calls: in the context of high-risk funds that issue capital calls, the Client may be subject to an additional capital call.
Additional capital call commitments may be drawn down over several years. The Client’s commitments are thus not limited to
his/their initial investment. If the Client defaults on a capital call, the Client will generally lose all or some of his/their rights.
Furthermore, some high-risk funds include "claw back" clauses in their legal documents, according to which investors may
be required to return certain previously received capital or interest distributions to the funds in order to fulfil certain fund
obligations pro rata to their ownership interest in the funds;
(vii)
Other features and risks of high-risk funds are described in detail in the appendix to these General Terms and Conditions titled
"Risks Associated with Financial Instruments" that has been delivered to the Client and which forms an integral part hereof.
Release from liability concerning investments in high-risk funds
Where the Client authorises the Bank to invest in high-risk funds, the Client acknowledges that the Client is aware of the risks arising from
such investments and accepts them.
If the Client gives instructions to the Bank to invest in high-risk funds, the Client shall confirm that:
(i)
the Client has examined all the legal and promotional documents relating to the high-risk funds on the basis of which it has
decided, on his/their own initiative, to invest;
(ii)
the Client expressly accepts that the Bank will not examine the prospectus, financial statements or subscription agreement
relating to the shares or units that the Client wishes to purchase and nor will the Bank carry out any control or verification
concerning the envisaged subscription or accept any liability of any nature whatsoever for any damage that may be suffered by
the Client;
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 22
(iii)
the Client expressly accepts that the Bank has no obligation to value the shares or units of high-risk funds either independently or
with the help of external agents;
(iv)
the Client is an experienced investor with extensive knowledge in the fields of finance and business, able to assess the economic,
political, legal and other risks related to the envisaged transaction(s) and accepts them completely;
(v)
the Client understands in detail the clauses of the prospectus and the subscription agreement concerning the shares or units of
the high-risk funds;
(vi)
the Client satisfies the conditions laid down in the legal documents of the high-risk funds (nationality, domicile, profession,
status, etc.) in order to subscribe thereto;
(vii)
the Client accepts that, if required to do so, the Bank shall provide information, particularly in connection with the identity of the
Client or the beneficial owner, to the regulatory or market supervisory authorities or to the high-risk funds’ management bodies
or to any third party appointed by those bodies;
(viii)
the Client has considered carefully whether the investment is appropriate, in the light of the Client’s personal circumstances and
financial resources;
(ix)
the Client has the necessary knowledge or has consulted the Client’s own advisor as to the tax implications of investing in highrisk funds in the light of the Client’s specific situation;
(x)
the Client has assessed the risks associated with the envisaged subscription and is aware that the Client may not only receive no
income from the envisaged transaction but may also lose all of his/their investment(s);
(xi)
the Client expressly accepts that, if the Bank appears on a fund register as a shareholder, it is in reality exclusively as an
intermediary in the name and on behalf of the Client that the Bank holds the fund’s shares and the name indicated on the
subscription form is of no importance in respect of the Bank’s role of representative for its Client;
(xii)
the Client undertakes not to directly or indirectly give the high-risk funds in which the Bank has invested on behalf of the Client
any instruction with respect to the shares or units of such funds and to the rights attached thereto and not to undertake any act
of disposal, including using those shares or units as collateral, without informing the Bank of this beforehand.
If the Client gives instructions to the Bank to invest in high-risk funds, it is the Client’s responsibility to obtain all necessary advice and
information to allow the Client to assess, alone or with the assistance of his/their advisors, the value of the securities and the key taxrelated factors with respect to the tax legislation of the Client’s country of domicile. The Bank shall initially record the securities on the
account statements at the price notified by the Client on the basis of all relevant documents. It is the Client’s responsibility to send
the Bank any documentation and information allowing for the value of the securities to be modified subsequently. However, the Bank
reserves the right to disregard the information sent to it and to record a security with a different value, or with a zero value, on the account
statements. In addition, in the absence of any information from the Client concerning the value of a security for a certain period of time,
the Bank also reserves the right to record such security with a zero value on the account statements.
In the event of the collapse of a high-risk fund or proceedings affecting such a fund, the Bank shall accept no liability with respect to the
lodgement and follow-up of claims. The Client shall be solely responsible for taking the necessary action to protect and assert his/their
rights.
49.4 Investments in structured products
(a)
Description of structured products
Structured products are issued either publicly or privately. Their redemption value depends on the performance of one or more
underlyings. They may have a fixed or unlimited term and consist of one or more components, at least one of which is a derivative.
Together, they constitute a new investment vehicle. Structured products are traded on the stock exchange or over-the-counter.
(b)
Risks
Issuer Risk: the issuer or debtor of a structured product may become insolvent, preventing recovery of the investment in the structured
product. The investment instrument’s value is therefore dependent on the performance of the underlying but also on the creditworthiness
of the issuer, which may change over the term of the structured product.
Lack of liquidity: the tradability of a structured product depends on whether the issuer or market maker is prepared to make a price. Even
if they are, liquidity risks can still arise. If the market is not liquid, the Client runs the risk of having either to hold the structured product to
maturity or sell it at an unfavourable price.
Valuation: it may be difficult or impossible to determine a fair price or compare prices, as there is often only one market maker.
Consequently, the valuation may be inaccurate.
Economic risk: each structured product has a specific risk profile, resulting from the combined effects of the risks inherent in its
component parts. Due to the almost infinite number of possible combinations, the risks inherent in each case cannot be described here in
detail. It is the Client’s responsibility to seek specific information on this subject, for example by referring to the product description.
(c)
Release from liability concerning investments in structured products
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 23
Where the Client authorises the Bank to invest in structured products, the Client confirms that they are aware of the risks arising from
such investments and accepts them.
If the Client instructs the Bank to invest in structured products, it shall confirm that:
(i)
the Client has examined all the legal and promotional documents relating to the structured products on the basis of which it has
decided, on his/their own initiative, to invest;
(ii)
the Client expressly accepts that the Bank will not examine the legal and promotional documents relating to the structured
products that it wishes to purchase and nor will the Bank carry out any control or verification concerning the envisaged
investment or accept any liability of any nature whatsoever for any damages that might be suffered by the Client;
(iii)
the Client expressly accepts that the Bank has no obligation to value the structured products either independently or with the
help of external agents;
(iv)
the Client has sufficient knowledge and experience in the financial field to assess the risks associated with such investments;
(v)
the Client satisfies the conditions laid down in the legal documents (nationality, domicile, profession, status, etc.) in order to
subscribe thereto;
(vi)
the Client has considered carefully whether the investment is appropriate, in the light of the Client’s personal circumstances and
financial resources;
(vii)
the Client has the necessary knowledge or has consulted their own advisor as to the tax implications of investing in the
structured products in the light of the Client’s specific situation.
If the Client gives instructions to the Bank to invest in structured products, it is the Client’s responsibility to obtain all necessary advice
and information to allow the Client to assess, alone or with the assistance of his/their advisors, the value of the securities and the key
tax-related factors with respect to the tax legislation of the Client’s country of domicile. The Bank shall initially record the securities on
the account statements at the price notified by the Client on the basis of all relevant documents. It is the Client’s responsibility to send
the Bank any documentation and information allowing for the value of the securities to be modified subsequently. However, the Bank
reserves the right to disregard the information sent to it and to record securities with a different value, or with a zero value, on the account
statements. In addition, in the absence of any information from the Client concerning the value of a security for a certain period of time,
the Bank also reserves the right to record such security with a zero value on the account statements.
In the event of the insolvency of the issuer or debtor or proceedings affecting the issuer or debtor, the Bank shall not accept any liability
with respect to the lodgement and follow-up of claims. The Client shall be solely responsible for taking the necessary action to protect and
assert his/their rights.
50. Investments in derivative instruments
50.1 Principle
(a)
(b)
Standardised derivative instruments
This Article applies to transactions in standardised derivative instruments, i.e. buying and selling the following securities on the various
leading organised exchanges, but also through before-hours trading and over-the-counter ("OTC") trading:
(i)
options trading in securities, precious metals, commodities, exchange rates, interest rates, indexes, exchange-traded options,
warrants or listed options, futures options, covered warrants and combinations of the above;
(ii)
futures trading in securities, precious metals, commodities, exchange rates, interest rates, indexes, in particular financial futures,
currency futures and combinations thereof;
(iii)
hybrid products, particularly guaranteed-capital and non-guaranteed-capital products.
Non-standardised OTC derivative instruments
This Article also applies to non-standardised OTC derivative instruments, the contractual specifications of which are agreed individually
between the contracting parties, which are not traded on-exchange, over-the-counter or on any other organised market and whose
price is derived from the value of underlying assets such as securities, precious metals, commodities, exchange rates, interest rates or
indexes (defined as the "Transactions"). The Transactions may be structured as options, futures, swaps, hybrid or structured products or a
combination of these.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 24
50.2 50.3 Risks associated with such transactions
(a)
Economic risk: the risk of loss is in theory unlimited for the sale of uncovered calls, the purchase and sale of financial futures and
forward purchases or sales. In the worst case scenario, the Client may lose not only the initial and additional margin but may also incur
considerable losses if the contract is liquidated at a loss or cannot be fulfilled.
(b)
Liquidity risk: the regulations applicable to the markets (e.g. suspension of trading or other stock exchange restrictions) and/or a
significant imbalance in supply and demand may make it temporarily impossible or very difficult to execute buy or sell orders and,
consequently, to unwind positions that the Client may wish or be obliged to liquidate.
(c)
Non-transferability and non-tradability: non-standardised contracts may only in principle be liquidated by undertaking the reverse
transaction with the same counterparty, and the assignment or transfer of transactions to third parties requires the agreement of all
parties.
(d)
Lack of market and lack of price transparency: contractual specifications are individually determined between the Bank and the
counterparty and there is no stock exchange on which to trade the Transactions or to set prices.
(e)
Credit risk and issuer-related risk: Transactions may be concluded directly between the Bank and the counterparty without the intervention
of a central clearing system, particularly if the Transactions fall outside the scope of Regulation (EU) 648/2012 on over-the-counter
derivatives, central counterparties and trade repositories. Moreover, Transactions may be based on paper securities issued by third
companies for which the Bank or the counterparty gives no guarantees or assurance as to the issuer's financial situation.
(f)
Netting risk: In order to limit the credit risk incurred, the Bank may enter into master agreements with counterparties providing for
netting mechanisms, i.e. accelerating the payment and netting of the rights and obligations of the Bank and the counterparty concerned
if certain events occur, such as in particular the bankruptcy of one of the parties. Such mechanisms may lead to the total liquidation
of all Transactions existing at a certain time between the Bank and the counterparty concerned, enabling exposure to the credit risk
inherent in the counterparty to be reduced. Such mechanisms may, however, also lead to the early liquidation of certain Transactions at an
unfavourable time for the Client. Furthermore, the Bank will enter into Transactions with several counterparties, owing in particular to the
price and conditions that they offer. Thus, the benefits of netting for the Bank, and consequently for the Client, may be considerably limited
in the event that only those Transactions concluded with a specific counterparty are liquidated. The Client may benefit only in a limited
manner from the advantages associated with the netting mechanisms, and may not even benefit from them at all, if the Transaction(s)
liquidated with a specific counterparty represent only a portion of all Transactions concluded in the execution hereof.
Relations between the Client and the Bank
When investing in derivative instruments, specific obligations may be incumbent upon the Bank or the Client, which may derogate from the other
terms and conditions specified in these General Terms and Conditions and which are set out below.
If the Client gives instructions to the Bank to invest in derivative instruments, the Client undertakes only to send orders to the Bank which
correspond to his/their financial means. The Client shall be personally responsible for the results of any orders that are placed, to the exclusion of
any liability on the part of the Bank or any organisation acting as clearing house on any market whatsoever.
Clients who communicate order specifications (buy or sell, put or call, number of contracts, strike price, expiry date, etc.) verbally or by fax shall be
solely responsible for any errors, misunderstandings or falsification that may result from their order being sent.
The Bank shall be entitled to refuse an order if the order does not comply with these General Terms and Conditions, if the underlying liquidity or
securities required to execute the order are not available in the Client's account(s) with the Bank (e.g. purchase of options, sale of covered options),
if the amount of margin required for the transaction concerned is not available (i.e. transactions involving margin calls) or for any other reason as it
sees fit. The Bank shall under no circumstances be held liable for the consequences of such a refusal.
For standardised derivatives, the Bank shall execute such transactions pursuant to the regulations, directives, practices and contractual
specifications of the exchanges and markets concerned, through brokers that it shall choose. It may also act as counterparty.
For non-standardised OTC derivatives, contractual specifications shall be agreed between the Bank and the counterparties chosen by the Bank,
subject to specific instructions issued by the Client. The Client releases the Bank from any liability as regards the choice of counterparties.
Furthermore, owing to the content of the master agreements that normally govern the Transactions concluded by the Bank with its counterparties,
the Client accepts that it may not assert any right against counterparties with whom the Bank concludes the Transactions.
Only the documents and statements established by the Bank shall be binding when executing Transactions. These alone shall be used to determine
gains and/or losses, to the exclusion of any other papers or documents. For non-standardised OTC derivative instruments, the Bank shall send
statements to the Client and the latter must notify the Bank of any error within three business days following the conclusion of the Transactions.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 25
The Client acknowledges that certain exchanges impose position limits and undertakes to comply therewith in respect of the Client’s overall
position, irrespective of whether the Client’s Transactions are processed through one or several Banks.
In the event that authorised position limits and/or reporting limits laid down by the regulations of the stock exchanges concerned to monitor
position limits are exceeded, the Client expressly authorises the Bank, in response to a request from an exchange, either to reveal the Client’s
identity or position(s), or to liquidate the Client’s position(s) if this makes it possible for the Client's name not to be disclosed. The Bank undertakes
to inform the Client of such a request without delay.
50.4 Sale of covered options
The Client's instructions to sell a covered put or call shall only be executed by the Bank if the Client has deposited with the Bank a sufficient number
of underlying securities or the necessary liquidity to settle any options exercised. The underlying securities shall be blocked in the Client's account
for the duration of the option.
By giving instructions to sell a covered option, the Client transfers to the Bank, as collateral, ownership of the respective underlying securities
or liquidity required to cover the transaction and authorises the Bank to transfer ownership or to deposit such securities as collateral with its
correspondent bank or with any exchange or clearing house concerned. Such transfer of ownership as collateral shall remain in force for as long as
the Client’s short position remains open.
By giving instructions to sell a covered call, the Client also entrusts the Bank with the task of confirming delivery of the securities, if the option is
exercised, to the correspondent bank.
50.5 Providing margins
(a)
If the Client instructs the Bank to perform a transaction subject to a margin call (e.g. sale of uncovered put and call options, purchase/sale
of financial futures, forward transactions), the initial margin required must be provided. The initial margin shall be provided to the Bank
either by the pledging or transfer of title for security purposes of assets recognised by the Bank, or by using a credit limit granted by the
Bank for the amount of such margin. The collateral shall be valued pursuant to the Bank's principles as regards pledges.
(b)
Margins shall be set by the Bank and may change, at any time and without notice, according to developments in the market (e.g.
significant fluctuations in prices) or the applicable regulations.
(c)
If the value of the collateral delivered to the Bank pursuant to the provisions above no longer covers the margin set by the Bank
(particularly following losses recorded on a transaction) or the Bank considers, at its own discretion, that the value of such collateral is
no longer sufficient to cover the Bank's claims in respect of the Client, the Client shall be obliged to provide additional margin (additional
margin call). In this case, the Client undertakes to meet the entirety of the margin requirement within one business day of notice from the
Bank of such insufficiency (by telephone, fax or post).
In the absence of instructions to the contrary communicated in writing to the Bank, the Client explicitly accepts, particularly if the Client
has given the Bank an order to hold correspondence, that the period of one business day fixed above commences as from the date
appearing on the document drawn up by the Bank, or as from the date of the telephone conversation.
(d)
If the Client does not respond, for any reason whatsoever, to the additional margin call within the period laid down in the above paragraph,
the Bank's claims against the Client shall become due immediately and the Bank shall be authorised to liquidate, as its own discretion,
immediately and without other formalities or notice, all or some of the Client's open transactions pursuant to Article 50.6 hereinbelow
and/or to realise all or some of the assets provided as collateral by the Client as per Article 4 of the General Terms and Conditions.
In such a situation, the Bank shall also be entitled, at its own discretion and without incurring any liability whatsoever for any
consequences of its decision, to defer application of the measures described hereinabove by covering the additional margin call by means
of a short-term debit on the Client's account.
50.6
Liquidation of contracts
(a)
Long or buy positions on options that are in-the-money and with physical delivery or settlement in cash (subject to point b) hereinbelow)
shall be exercised automatically on the day of expiry of the option, unless express instructions to the contrary are received by the Bank in
sufficient time, in accordance with market practice.
(b) For positions (long or buy/short or sell) on rates and commodities (including precious metals) derivatives, the Bank shall close the
positions on the last possible execution day (i.e. the last day preceding the "first notice day"), unless express instructions to the contrary are
received by the Bank in sufficient time, according to the applicable market rules.
(c)
In the case of standardised derivative transactions, the Bank shall be authorised to liquidate all or some of the Client's open positions
immediately and without informing the Client beforehand, if the Client does not provide the additional margin required pursuant to
Article 51.5 hereinabove.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 26
(d)
50.7
In the case of non-standardised derivative transactions, the Bank shall be authorised to liquidate all or some of the Client's transactions
immediately and without informing the Client beforehand, if one of the following events occurs:
(i)
the Client is late in fulfilling a payment or delivery obligation assumed in the context of a transaction;
(ii)
the Client violates an obligation assumed under these General Terms and Conditions, particularly the obligation to respond to a
margin call as provided for in Article 50.5 hereinabove;
(iii)
the Client violates an obligation assumed under another contract or in other dealings with the Bank;
(iv)
the Client requests that the Client’s account relationship with the Bank be terminated and/or that the majority of the assets
comprising the Client’s portfolio be transferred;
(v)
a case of netting occurs pursuant to the master agreement concluded between the Bank and the specific counterparty
(particularly the bankruptcy of or payment default by the counterparty) leading to the early liquidation of all or some of the
transactions concluded by the Bank with the counterparty concerned;
(vi)
the Client becomes insolvent, loses enjoyment of the Client’s civil rights or becomes incapable or is declared bankrupt.
(e)
In the event of the early liquidation of one or several transaction(s), all obligations (due and not yet due) not yet executed as part of the
transactions concerned shall be cancelled and replaced by the obligation to pay a liquidation value. The liquidation value constitutes the
replacement value of the liquidated transactions (i.e. the amount corresponding to the conclusion of transactions with the same features
as the transactions liquidated on the early liquidation date), plus any amount due but not paid by the Client as part of such transactions,
less any amounts due but not paid to the Client in the context of such transactions. The liquidation value calculated by the Bank shall be
considered to be accurate, final and binding on the parties, except in the event of a manifest error on the part of the Bank. Any amount
calculated that is payable in a currency other than the EUR shall be converted at the exchange rate applicable on the early liquidation date.
(f)
The liquidation value calculated in this way shall be payable to the Client (if it is a negative figure) or by the Client (if it is a positive figure)
within three (3) business days as from notification by the Bank. The Bank shall nevertheless be entitled to set off its obligation to pay
any liquidation value against all of its other claims against the Client, whatever the source, the due date or currency of such claims and
without taking into account collateral that may have been agreed specifically for this purpose.
Release from liability concerning investments in derivative instruments
Where the Client authorises the Bank to invest in derivative instruments, the Client confirms that they are aware of the specific obligations arising
therefrom and the risks arising from such investments and accepts them.
51. Securities lending
51.1 Purpose
The following provisions apply where the Client has given the Bank authorisation, in the account opening form or any subsequent amendment
thereto, to perform, in the Bank’s name but on behalf and at the sole risk of the Client, securities lending transactions with leading banks or nonbanking entities.
The Client shall thus make available to the Bank on a permanent basis and with a view to their lending according to the procedures described
hereinafter all of the loanable securities that are currently deposited or may be deposited in the future in the account given in reference in the
account opening form or any subsequent amendment thereto, subject to written instructions to the contrary being issued pursuant to Article 51.4
hereinafter.
The Client’s authorisation may be withdrawn at any time, subject to eight (8) business days’ notice.
The conditions governing each securities loan shall be the subject of a special agreement between the Bank, acting in its own name but on behalf
and at the sole risk of the Client, and the borrower. The Client hereby undertakes to accept all of the conditions laid down in each securities lending
agreement between the Bank and the borrower, and has noted the customary terms and conditions of such loans as outlined below.
51.2 Lendable securities
All types of financial instruments that are listed on a stock exchange in Luxembourg or abroad, whether or not they are incorporated in a physical
title, provided they have not been expressly excluded from securities lending by the Client pursuant to Article 51.4 hereinafter.
51.3 Decision to undertake securities lending activities
The Bank shall have sole authority to decide which securities are lendable among all those made available to it by the Client and at what time and
under which conditions. The Bank is not, however, authorised to act as counterparty to the Client, i.e. to borrow securities for its own account.
The Client may under no circumstances require that securities made available to the Bank be lent, since the undertake securities lending activities
mainly depends on supply and demand in the market.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 27
The Client waives the right to be informed expressly by the Bank when such securities lending activity is undertaken, since such activities are
notified in the commission statements sent to the Client periodically by the Bank and on the periodic portfolio statements.
The securities shall be loaned by the Bank to counterparties with whom Lombard Odier & Cie Geneva has signed an agreement. The securities shall
be divided among several counterparties or loaned to only one of them, according to supply and demand. The borrower guarantees in principle the
right to return of the securities and the value of the securities not returned on the agreed date by providing guarantees (generally the provision of
a bank guarantee, securities delivered as collateral, or pledging of securities or cash in the Bank’s possession) with a value equivalent to that of the
loaned securities on the day that the loan was granted.
51.4 Specific instructions to the Bank
The Client undertakes to provide the Bank, in writing, with all specific instructions relating to securities lending activities, namely:
51.5 •
a decision to exclude or make available specified securities for securities lending transactions;
•
a decision to have securities that are the subject of a loan returned.
Ownership and pledge of loaned securities
At the time the loan is granted, ownership of the securities and all voting and economic rights attached thereto shall pass to the borrower. The
Bank shall acquire, on the Client's behalf, a claim to the return of similar securities of the same issuer (except their numbers in the event of bearer
securities and except in the case of any conversions), which shall extend to the additional securities that may result from subscription rights or
options attached to the securities initially loaned if such rights have been exercised pursuant to Article 51.9 (b).
If the securities are used or are to be used in the future as collateral by the Bank as part of a loan or any other transaction, said collateral shall
not be compromised by the loan of such securities. Instead of the securities, the claim to return shall be pledged or assigned to the Bank. All of
the provisions contained in the deed of pledge and assignment concluded separately shall form an integral part of this agreement as regards the
pledging and assignment of the Client's rights resulting from a securities loan.
51.6
Term of the loan, right of disposal and return of the loaned securities
The term of the loan shall be set by mutual agreement between the Bank and the borrower.
The Client may instruct the Bank at any time to request the return of the loaned securities pursuant to Article 51.4. In such a case, the assets shall be
returned to the Client within a period in line with banking practice, which takes into account in particular the countries concerned; such period shall
commence on the day on which the Bank receives the written order from the Client. Release and return of the securities shall take place subject to
any legal or contractual lien held by the Bank.
Furthermore, the Bank shall be authorised at all times to demand the return of the loaned securities without having instructions from the Client to
this effect.
Finally, the borrower shall be required to return the loaned securities at any time.
The Client waives his/their right to dispose of the securities that are the subject of a loan throughout the term of such loan. The Client shall recover
the right to dispose of the securities upon their return.
51.7 Income from securities lending activities
Income from securities lending activities such as, in particular, dividends, interest or bonuses generated during the period of the loan and paid by
the borrower to the Bank shall be credited automatically to the Client, after deduction of any Luxembourg or foreign withholding taxes or collection
fees. The same shall apply to any other income or bonuses that may be received by the borrower in connection with the loaned securities, in
particular when rights attached to such securities are exercised. If securities are received in the context of rights exercised on capital markets as
described in Article 51.9 (b) hereinafter, such securities shall, generally, be returned with the loaned securities.
51.8 Loan remuneration
Each loan shall be the subject of commission paid by the borrower. The Bank shall credit the Client's account with the commission paid by the
borrower, less the portion to be paid to the Bank to cover its fees and services.
The amount of such commission shall be set according to the number and nature of the loaned securities, the term of the loan, and the conditions
prevailing on the market for this type of transaction.
51.9 Special conditions concerning voting and economic rights
To the extent ownership of the securities that are the subject of a loan passes to the borrower, the Client expressly waives the right to exercise
voting rights, economic rights and other rights attached to such securities throughout the term of the loan, subject to the provisions hereinafter.
(a)
Voting rights
If the Client does not intend to waive the right to exercise his/their voting rights (in particular the right to participate at general meetings
of shareholders of a public limited company) in respect of certain securities, it must exclude said securities from the loan pursuant to
Article 51.4 hereinabove, whether for a given period or on a permanent basis, but giving sufficient notice to the Bank.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 28
In the case of securities that have already been loaned, the Client must request their return pursuant to Article 51.6 hereinabove, giving
sufficient notice to the Bank.
In both cases referred to above, it shall be incumbent upon the Client to obtain information from the Bank as regards the notice period to
be observed in order to be able to exercise voting rights in a specific case.
The Client shall bear the risk of not being re-entered in the register of shares in the case of registered securities in sufficient time to
exercise voting rights relating to the company at issue following the loan of registered shares.
(b)
Economic rights and other rights
Notwithstanding the loan, the Bank shall remain in charge of day-to-day administration.
The Client recognises that the borrower - as a result of the transfer of ownership - is authorised to exercise, throughout the term of the
loan, the rights attached to loaned securities relating to capital markets events such as, in particular, subscription, conversion and option
rights.
However, the Client may at any time send the Bank the Client’s own instructions, pursuant to Article 51.4, regarding the exercise of rights
attached to loaned securities relating to capital markets events, by giving notice of seven (7) business days (including the provision of the
information necessary to exercise the specified rights). In such a case, the Bank undertakes to send these instructions to the borrower
immediately, who shall be bound to act upon them, pursuant to their agreements with the Bank.
The Bank may under no circumstances be held liable for due and proper execution by the borrower of the Client's instructions.
Actual expenses such as, in particular, the payment of the issue price when subscription or option rights are exercised, or conversion fees,
shall be billed to the Client, as shall usual commission and fees, in the same way as when such rights are exercised by the Client in the
absence of any loan.
51.10 The Bank's liability and the consequences of any default by the borrower
The Bank undertakes to the Client that it will conclude securities lending transactions with leading banks or non-banking entities and obtain
collateral of a value equivalent to that of the loaned securities on the day that the loan is granted. It also undertakes to take, pursuant to these
General Terms and Conditions and any specific instructions from the Client, all measures as it sees fit, at his/their own discretion, to ensure the
proper performance of loan transactions.
However, the Bank cannot be held liable to the Client for any damage resulting from non-performance by the borrower of their obligations in the
context of a loan transaction, whatever the reasons for said non-performance.
In particular, the Bank shall not be liable to the Client for the consequences of any absence or insufficiency of collateral if the Bank has complied
with the obligations set out hereinabove. Additionally, the Bank shall not be liable for commission due by the borrower on loan transactions.
If the borrower defaults, the master agreement entered into with the latter may be terminated by the Bank, such termination being automatic in
the event of bankruptcy or equivalent of one of the parties.
Termination shall initiate a general set-off mechanism relating to transactions in progress between the Bank and said counterparty. As a result,
reciprocal claims shall become due and shall be assessed and converted into cash, in order to determine the net amount payable by one of the
parties to the other. In this context, the Bank shall be authorised by the Client to liquidate the collateral delivered on their behalf.
The liquidation value of all collateral or the proceeds of realisation thereof may be less than the overall amount due by said counterparty. This
insufficiency may be even more significant if the collateral has simultaneously lost value or if the issuer thereof has defaulted.
The Client shall bear the resulting loss in proportion to the transactions performed by the Bank on his/their behalf.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 29
Lombard Odier (Europe) S.A.
Netherlands Branch
Markets in Financial Instruments Directive (MiFID)
Appendix 1
Lombard Odier (Europe) S.A. · Netherlands Branch
Herengracht 466 · 1017 CA Amsterdam · Nederland
Credit institution regulated by the Commission de Surveillance du Secteur Financier (CSSF)
and the Nederlandsche Bank (DNB).
E-mail: [email protected]
January 2014
1.Introduction
The purpose of this Appendix is to inform you of certain changes with the introduction of the Markets in Financial Instruments Directive ("MiFID").
We believe that the impact of MiFID on our relationship is overwhelmingly positive. Your interests as an investor are given stronger protection, and we
are also required to pay greater attention to your particular circumstances and financial objectives. This is achieved, in part, through a system of client
categorisation.
MiFID introduced two main categories of clients, "Retail clients" (hereafter "Private clients") in contrast to "Professional clients", and a separate and distinct
third category of clients for a limited range of business "Eligible counterparties". Different levels of regulatory protection are given to clients within each
category.
•
Private clients are afforded the greatest regulatory protection;
•
Professional clients are considered to possess the experience, knowledge and expertise to make their own investment decisions and properly assess
the risks that they incur. They are therefore afforded less regulatory protection than Private clients;
•
Eligible counterparties consist of regulated financial institutions and certain other undertakings. MiFID stipulates a light regulatory regime for
transactions between investment firms and Eligible counterparties.
We wish to highlight the fact that the Firm has decided to treat all of its clients as Private clients. This affects the regulatory protection that you will receive as
of 1 November 2007.
MiFID provides considerable flexibility for movement between categories, provided certain criteria are met. As a Private client you will be able to "opt up" to
professional status either for all investments or for one or more particular type of investment.
If you inform us that you wish to opt up to professional status, we will need to evaluate whether this is warranted by the scope of your knowledge, expertise
or experience. An "opt-up" may sometimes only be possible for a certain type of investment (for example, the fact that you may be knowledgeable and
experienced in relation to bonds does not necessarily mean that you are knowledgeable and experienced in relation to equity derivatives).
We also need to ensure that you meet two out of three of the following specific criteria:
•
You have carried out an average of ten substantial transactions per quarter on the relevant market over the previous four quarters;
•
The value of your financial instrument portfolio, defined as including cash deposits and financial instruments, exceeds 500,000 EUR;
•
You work or have worked in the financial sector for at least one year in a professional position which requires knowledge of the transactions or
services envisaged.
If you meet the above criteria and wish to be treated as a Professional Client, either generally or for a particular type of investment, please contact your
relationship manager. We will then advise you in writing of the protection and investor compensation rights that you stand to lose as a result of waiving your
Private client status, and you would be required to confirm to us that you are aware of these consequences.
At the same time, before you can invest in financial instruments, you will be asked to complete a fact-finding assessment. This will enable us to determine
whether certain products and services that we offer are suitable or appropriate for you, given your circumstances and particular level of knowledge and
experience. Depending on the type of relationship you have with the Firm, you will be requested to complete a Suitability Assessment (for managed and
advised accounts) or an Appropriateness Assessment (for non-managed accounts). Your relationship manager will help you complete this important
assessment.
There are other areas in which MiFID aims to ensure that clients are better protected and informed than ever. For instance, we are required to set up a "Best
Execution" policy for client orders, as well as a "Conflict of Interest" policy, which we must adhere to in all our dealings with you and when acting on your
behalf.
Please note that our fee schedule might be changed in order to meet MiFID requirements. We recommend that you contact your relationship manager
should you require additional details in this regard.
Finally, we may give or receive inducements from third parties (including other Lombard Odier Group companies) in the course of providing investment and
related ancillary services to our clients. Such inducements are designed to enhance the quality of the services you receive. Specifically, Lombard Odier may
receive/pay a share of the management fees charged for financial products held on the account of its clients. The nature, terms and amount of any such
inducement will vary on a case-by-case basis as agreed with the third party concerned. We undertake to disclose further details of such inducements to you
at your request, as soon as reasonably practicable.
If you wish to discuss any of the issues addressed in this Appendix, or any other matter that is of concern to you, please contact your local Lombard Odier
office.
Our members of staff will be happy to answer your queries.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 32
2.
Conflicts of Interest Policy
2.1Background
This document sets out the conflicts of interest policy ("Policy"), established in accordance with the Markets in Financial Instruments Directive
("MiFID") of Lombard Odier Group ("Lombard Odier"), which includes in particular the following subsidiaries:
•
Lombard Odier Gestión (España) S.G.I.I.C., S.A.U., Spain
•
Lombard Odier (Europe) S.A. in Luxembourg and its branches in Belgium, the Netherlands, Spain and United Kingdom
•
Lombard Odier & Cie (Gibraltar) Limited, Gibraltar
•
Lombard Odier & Cie (France), France
•
Lombard Odier Gestion (France), France
This policy is issued pursuant to, and reflects compliance with, the rules on the management of conflicts of interest adopted under the Markets in
Financial Instruments Directive. This policy supplements Lombard Odier’s overarching commitment to act with integrity and fairness towards its
clients at all times.
In practical terms, Lombard Odier’s employees are required to comply with our In-House Regulatory Code and any specific internal instructions
relating to conflicts of interest.
2.2
General Principle
Lombard Odier endeavours always to act professionally and independently with the client’s best interests in mind, and takes all reasonable steps
to identify and prevent conflicts of interest that may arise in the course of providing investment and/or ancillary services. Such conflicts of interest
may arise between:
•
Lombard Odier (either as a single entity or as a result of the interaction between different Lombard Odier Group entities) and a client of
Lombard Odier;
•
Lombard Odier staff, its representatives or any person directly or indirectly linked to Lombard Odier by control and a client of Lombard
Odier;
•
Two clients of Lombard Odier.
Where appropriate internal measures designed to manage conflicts of interest are considered insufficient to mitigate, with reasonable confidence,
risks of damage to a client’s interests, Lombard Odier will disclose the general or specific nature of these conflicts of interest openly to the client or
clients concerned.
We recognise that any conflict of interest may damage a client’s interest and that conflicts of interest are not premised on an assessment of
materiality.
2.3Application
I.
Identification of conflicts of interest: Lombard Odier has implemented organisational measures to identify generic conflicts of interest
that may occur, as described above. In addition, employees are responsible for identifying and reporting specific conflicts of interest to
senior management.
To determine whether a conflict of interest may arise, Lombard Odier employees are required to consider the following circumstances:
•
Lombard Odier or one of the persons referred to in the "General principle" section above is likely to make a financial gain, or avoid
a financial loss, at the expense of a client;
•
Lombard Odier or one of the persons referred to in the "General principle" section above has an interest in the outcome of a
service provided to a client or a transaction carried out on behalf of a client which is distinct from the client’s interest in that
outcome;
•
Lombard Odier or one of the persons referred to in the "General principle" section above has a financial or other incentive to
favour the interests of one client or group of clients over the interests of another client;
•
Lombard Odier or one of the persons referred to in the "General principle" section above carries out the same business as a client;
•
Lombard Odier or one of the persons referred to in the "General principle" section above receives or will receive from a firm or
individual other than the client concerned an inducement in relation to a service provided to the client, in the form of monies,
goods or services, other than the standard commission or fee for that service.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 33
II.
Process for preventing and managing conflicts of interest: Lombard Odier also maintains and operates effective organisational and
administrative measures designed to ensure that all reasonable steps are taken to prevent conflicts of interest from adversely affecting its
clients. These arrangements take into account any circumstances which may give rise to a conflict of interest arising from Lombard Odier’s
organisational structure and potential conflicting activities of Lombard Odier.
The following are the main ways in which Lombard Odier manages conflicts of interest:
•
Segregation of duties: Key activities which, by their nature, can give rise to conflicts of interest are segregated within the
organization. In addition, adequate internal procedures regulate the processes and restrict the flow of information among, and
within, business units so that activities are carried out with an appropriate level of independence and conflicts of interest that
may harm the interests of one or more clients are avoided.
•
Proprietary trading: Lombard Odier has implemented measures to adequately mitigate potential conflicts of interest created by
its own proprietary trading activities, if any. The execution of client orders may be delegated, where necessary, to other Group
entities with equivalent measures.
•
Staff matters: The following are the main measures taken by Lombard Odier in relation to its managers and employees.
•
Remuneration: The compensation package is based on a basic salary and a discretionary bonus which is related to
performance against staff objectives and performance of Lombard Odier as a whole. It is not directly linked to specific
transactions.
•
Personal securities dealing: Internal rules are established regarding staff dealing, in particular with regard to investment
professionals and financial analysts. Compliance performs periodic monitoring of personal deals to ensure that said
internal rules are complied with at all times.
•
Gifts and personal advantages: Internal rules cover the receiving and giving of gifts and other personal advantages. They
are designed to ensure that employees do not use their positions within Lombard Odier for significant personal gain
for themselves, their families or any other persons. All gifts above a designated value must be approved by Compliance
prior to acceptance.
•
Secondary activities and external appointments: Employees are required to work exclusively for Lombard Odier for
the duration of their employment. Employees are not permitted to perform any paid or unpaid work for a third party.
No employee may accept an appointment as a board member of a company or other commercial entity, nor any post
entailing financial risk, unless an exemption has been duly approved by Lombard Odier.
•
Internal guidance and training: It is not possible to predict all the possible conflicts of interest that may arise in the
course of business operations and staff must therefore be alert to the possibility that conflicts of interest can occur.
Relevant employees and managers receive training to ensure awareness and sensitivity to this matter, and also to
ensure that they can deal effectively with conflicts of interest should they arise.
III.
Governance: Senior management is responsible for ensuring that this policy and the In-House Regulatory Code are issued and revised on
a regular basis. It also ensures that the Compliance department monitors compliance with the In-House Regulatory Code and any internal
instructions relating to conflicts of interest. Any breach is reported to senior management and Lombard Odier reserves the right to take
any measures it deems necessary.
IV.
Documentation and disclosure: Lombard Odier maintains records, for a period of five years, of the services and activities performed in
which a conflict of interest entailing a material risk of damage to the interests of one or more clients has arisen.
Important notice: This policy does not form part of any contract between Lombard Odier and any of its clients or prospective clients and is simply
a statement of policy issued in accordance with Lombard Odier’s regulatory obligations.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 34
3.
Order Execution Policy of Lombard Odier Group
3.1
Introduction
This document sets the order execution policy ("Policy"), established in accordance with the Markets in Financial Instruments Directive ("MiFID"), of
Lombard Odier Group ("Lombard Odier"), which includes in particular the following subsidiaries:
•
Lombard Odier Gestión (España) S.G.I.I.C., S.A.U., Spain
•
Lombard Odier (Europe) S.A. in Luxembourg and its branches in Belgium, the Netherlands, Spain and United Kingdom
•
Lombard Odier & Cie (Gibraltar) Limited, Gibraltar
•
Lombard Odier & Cie (France), France
•
Lombard Odier Gestion (France), France
We will take all reasonable steps using the resources available to us to ensure that we have processes in place that can reasonably be expected to
lead to the delivery of Best Execution (chapter 3.3) and Best Selection (chapter 3.4).
Please refer to the attached Glossary for a precise definition of the terms used in this document.
3.2
Scope of this Document
This Policy shall equally apply to Private and Professional clients, unless otherwise specified. Eligible counterparties are not included in the scope of
this Policy.
This Policy only applies to the financial instruments as set out in the Appendix. Some financial instruments are not covered by MiFID and are
therefore not covered by the Policy.
These include:
•
Spot FX transactions or FX forward transactions;
•
Spot commodity transactions.
Accordingly, when receiving and executing client orders on your behalf in relation to financial instruments not covered by MiFID, we will comply
with standard market practices.
3.3
Best Execution
3.3.1 Best Execution Arrangements
When receiving and executing client orders on your behalf in relation to financial instruments as set out in the Appendix, we will take all
reasonable steps to achieve best execution. This means that we have in place a policy and procedures designed to obtain the best possible
execution result, subject to and taking into account the best balance among the following range of factors:
•
Price;
•
Costs;
•
Speed;
•
Likelihood of execution;
•
Likelihood of settlement;
•
Size of the order;
•
Nature of and any other consideration that may be relevant to the execution of a particular order.
Total consideration of price and cost will ordinarily merit a high relative importance in obtaining the best possible result. However, for
some clients, orders, financial instruments, markets or market conditions, we may determine that other execution factors shall have the
same importance or shall take precedence over price in obtaining the best possible execution result.
If we receive a specific instruction from you, the order will be executed following your instruction according to chapter 3.5.
In the absence of express instructions from you, we will balance the above-mentioned factors based on our professional experience
and judgment in light of the available market information and market conditions at the appropriate time, and taking into account the
following criteria:
•
The type of client concerned;
•
The order characteristics;
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 35
•
The financial instruments that the order relates to;
•
The execution venues to which the order can be directed.
We will act with due skill, care and diligence when executing a client order and will endeavour to take reasonable care to ascertain the best
price available for a transaction in the relevant market at that time, taking into consideration the nature and size of the order. Examples of
the reasonable care we will take when assessing the timing of the execution of all or part of a current client order includes:
•
When a foreseeable improvement in the level of liquidity in the relevant financial instruments is likely to enhance the terms on
which we may execute the order;
•
When executing an order as a series of partial executions over a period of time is likely to improve the terms on which the order
as a whole is executed.
Prevailing market conditions may not permit your order to be executed either immediately or in a single transaction. Large trades,
particularly those involving financial instruments where trading volumes are limited, can move prices in the market against the interests
of the client. In these circumstances, a series of partial executions over a period of time is likely to provide a better overall result than
executing one trade. Furthermore, we may carry out your order in aggregation with other orders if we consider that the aggregation of
orders is unlikely to work to the overall disadvantage of any client whose order is to be aggregated.
3.3.2 Factors affecting the Choice of Venue
In selecting the most appropriate venues for the purpose of executing your orders, we consider several factors, in particular:
•
General prices available;
•
The creditworthiness of the counterparties on the venue or the central counterparty;
•
Depth of liquidity;
•
Relative volatility in the market;
•
Transparency in the market;
•
Speed of execution;
•
Costs of execution; and/or
•
Quality and cost of clearing and settlement facilities.
In the Appendix I, Lombard Odier identifies execution venues for different types of financial instruments which it believes with reasonable
assurance can consistently offer best execution to its clients. The list included in the Appendix I is not exhaustive and Lombard Odier may
use alternative venues if it is necessary to ensure best execution for you. Lombard Odier may for example execute an order outside a
regulated market or a MTF from time to time, provided the venues it uses are consistent with our Policy.
3.3.3 General factors affecting our Policy
In providing best execution we are subject to the provisions set out in this Policy to exercise the same standards and operate the same
processes across all the different liquidity pools and financial instruments on which your orders are executed. However, the diversity of the
markets and instruments and the type of orders that you may place with us mean that we will have to take different factors into account
when we assess the nature of our Policy in the context of different instruments and different liquidity pools located in different countries.
The following non-exhaustive list provides examples of varying factors that may influence the best execution of your orders:
•
Liquidity pool infrastructure: electronic trading on a centralized market with a large number of participants is generally more
efficient than trading on an "over-the-counter" (OTC) market where transactions are negotiated bilaterally;
•
Price setting mechanism: on an "order-driven market" the price of a financial instrument is determined by the incoming buy and
sell orders, while on a "quote-driven market", the price is determined by one or several market makers;
•
"Price volatility": a price may fluctuate considerably on a particular market within a limited time period. In such markets, the
speed or timing of order execution may take priority;
•
"Liquidity": some financial instruments do not trade as frequently as others, and/or volumes are limited. In markets subject to
such low liquidity, best execution may be limited to the execution of the order itself. Markets with high liquidity can absorb both
high frequency and large orders within a short time period;
•
Country of the liquidity pool: markets in emerging countries do not afford the same infrastructure as markets in non-emerging
countries. As a consequence, Lombard Odier may need to reconsider the factors described above for specific client orders in order
to adapt to the specificities of trading on emerging markets;
•
Market information: the availability of accurate information and appropriate technology may also affect the choices as to the
most favourable liquidity pool for execution.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 36
Other factors may limit the choice of execution venue:
•
In some instances the execution venue may be limited to one platform or market upon which an order may be executed because
of the nature of your order or a specific instruction from you;
•
The nationality of the beneficial owner may exclude the execution of the order.
Under no circumstances can we be held liable for external causes that have partially or totally impeded us from providing you with best
execution.
3.4
Best Selection
When receiving and transmitting or placing your orders in relation to financial instruments for execution with brokers because Lombard Odier is
not a member of a selected trading venue, we will take all reasonable steps to achieve best selection. This means that while selecting entities, we
will endeavour to take all reasonable care to ensure that the entities can consistently provide best execution, taking into consideration the best
execution factors set out in this Policy, as well as:
•
The financial instruments concerned;
•
The type and structure of the market and the country where these brokers operate;
•
The available information on the market and the country where these brokers operate;
•
The policy adopted by the broker to demonstrate that the trades are executed in accordance with the best execution obligation and that
best execution procedures are monitored.
For brokers not subject to MiFID, we will take all reasonable steps to select the brokers that provide for the best service in the relevant financial
instruments, markets and geographical areas concerned.
Under specific circumstances (such as a specific instruction from you, particular market conditions, provisory failure of a broker, etc.), we may be
forced to transmit your order to an entity that has not been selected by our broker reviews in order to act in your best interests.
3.5
Specific Client Instructions
When you give us a specific instruction as order execution or transmission, the relevant part of the order will be executed in accordance with that
instruction, the remaining part in accordance with this policy. You should be aware that in providing a specific instruction, you may prevent us
from taking the steps which we have designed and implemented to obtain the best possible result for the execution or transmission of the order in
respect of the factors covered by those instructions.
Any written or oral contractual arrangement between you and us will take precedence over this Policy.
3.6
Reviewing Execution Quality and the Order Execution Policy
Lombard Odier will regularly review its Policy, at least annually or whenever a material change occurs. Lombard Odier will monitor the effectiveness
of its Policy, by reviewing its best execution arrangements, its brokers and its execution venues at different levels, depending, in particular, on the
type of financial instruments, the type of execution venue and the factors affecting our Policy.
You will be notified of any material changes to our Policy via our website www.lombardodier.com.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 37
4.
Appendix I to Order Policy of Lombard Odier Group
CLASS OF FINANCIAL INSTRUMENTS
PREFERRED BROKERS
VENUES/LIQUIDITY POOL*
Credit Suisse, UBS, Deutsche Bank, Barclays,
JP Morgan
SIX Swiss Exchange as a direct member
Equities
Equities
Examples: equities, global/American depositary
receipt, ETF, etc.
Other regulated market, MTF or liquidity pools
through "DMA" Direct Market Access (NYSE,
Euronext, Xetra)
OTC market
Bonds
Bonds
Deutsche Bank AG, UBS, Barclays
SIX Swiss Exchange, OTC market
Credit Suisse, UBS, Merill Lynch
SIX Swiss Exchange, OTC market
Credit Suisse; JP Morgan
NYSE Euronext life, Eurex (as a non clearing
member), Scoach
Examples: government bonds, emerging bonds,
high yield, credit bonds, asset-backed securities,
etc.
Convertibles
Derivatives
Derivatives on equities, indices, bonds,
commodities
Examples: equity futures, equity options,
warrants, bonds futures options, commodities
futures, etc.
Derivatives (money market)
OTC market
DMA and electronic trading platforms
Credit Suisse; JP Morgan
OTC market
Credit Suisse; JP Morgan
DMA
Credit Suisse; JP Morgan
OTC market
UBS, Bank of America, Barclays, Commerzbank
OTC market
Deutsche Bank, BNP, JP Morgan, UBS
Eurex for Swiss papers
Example: short-term FX structured deposit, dual
currency deposit (DCD), etc.
Derivatives (treasury)
Examples: currency futures, etc.
Derivatives (fixed income)
Examples: credit default swap, interest rate swap,
inflation linked swaps, etc.
Money Market
Money Market I
Examples: certificates of deposit, Euro commercial
paper (ECP), etc.
Money Market II
Examples: treasury bills, UK treasury, etc.
OTC market
Other financial instruments
Structured products
Examples: growth products (e.g. certificate, etc.),
mixed products (e.g. capital guaranteed, etc.),
income products (e.g. reverse convertibles, autocall, etc.)
HSBC, UBS, Royal Bank of Canada, Société
Générale, Barclays, JP Morgan
OTC market. Generally only one market maker, low
liquidity.
SIX Swiss Exchange, Scoach
Examples of underlying: equity, credit, forex,
interest rate, commodity
Units in collective investment undertakings
Credit Suisse, UBS, EFA
No venues/OTC market
* Several venues/liquidity pool may be used for the execution of one order
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 38
5.
Appendix II to Order Policy of Lombard Odier Group
CLASS OF FINANCIAL INSTRUMENTS
NOT COVERED BY MiFID
PREFERRED BROKERS
VENUES/LIQUIDITY POOL*
Lombard Odier
OTC market
Other financial instruments
Foreign Exchange
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 39
6. Glossary to the Order Policy of Lombard Odier Group
Broker: An individual or firm who acts as an intermediary between a buyer and a seller, usually charging a commission.
Broker review process: Process in place to evaluate the quality of the brokers according to different criteria which may be based on a formal process and/or
our daily professional experience.
Clearing & settlement: A system used to settle mutual indebtedness between a number of organizations (banks, brokers, etc.).
Client: Any natural or legal person to whom an investment firm provides investment and/or ancillary services.
Costs: Transaction fees charged to the client (commissions, settlement fees, etc.).
"DMA" Direct Market Access: Lombard Odier directly trades in a liquidity pool through broker facilities that grant a direct market access to that liquidity pool.
Eligible counterparty: A client according to Directive 2004/39 and Directive 2006/73.
Execution venue: Regulated market, Multilateral Trading Facility (MTF), systematic internaliser, market maker, and other liquidity providers.
Forward transactions: Purchase or sale of a specific quantity of a financial instrument at the current forward price, with delivery and settlement at a specified
future date.
Financial instrument: Those instruments specified in Section C of Appendix I of Directive 2004/39.
Likelihood of execution: The quality of an order execution on a certain execution venue.
Likelihood of settlement: The quality of order settlement.
Liquidity: Number and turnover of trades in a specific financial instrument over a certain period (day, week, etc.).
Liquidity pool: Any place where trades can be executed, including execution venues.
Membership: Stock exchange of which Lombard Odier is a member.
MiFID: The Markets in Financial Instruments Directive, an EU directive replacing the current Investment Services Directive (ISD) and further increasing
competitiveness and transparency in the financial markets (Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets
in financial instruments, OJ L145/1, 4.30.2004 and Commission Directive 2006/73/EC of 10 August 2006 implementing Directive 2004/39/EC, OJ L241/26,
9.2.2006).
"MTF" Multilateral Trading Facility: A multilateral system, operated by an investment firm or a market operator, which brings together multiple third-party
buying and selling interests in financial instruments in the system in accordance with non-discretionary rules, in a way that results in a contract pursuant to
the provisions of Title II.
Order-driven market: Market in which the price of a financial instrument is determined by the incoming buy and sell orders.
"OTC" Over-the-counter: A bilateral arrangement between buyer and seller, based on the best quote received. In some circumstances, where liquidity in the
instruments deteriorates, quotes may become unavailable. When this occurs, the importance the client places on executing the order becomes paramount
and "best execution" can equate to the order actually being executed.
Price: Price of a financial instrument (excluding fees).
Private client: A client who is not a professional client, classified under MiFID as a "Retail client".
Professional client: A client meeting the criteria laid down in Appendix II of the Directive 2004/39.
Quote driven market: Market in which the price is determined by one or several market makers.
Regulated market: A multilateral system operated and/or managed by a market operator, which brings together or facilitates the bringing together of
multiple third-party buying and selling interests in financial instruments in the system in accordance with its nondiscretionary rules, in a way that results in a
contract, in respect of the financial instruments admitted to trading under its rules and/or systems, and which is authorized and functions regularly.
Size: Number of financial instruments per order.
Speed: Rapidity of order execution.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 40
Lombard Odier (Europe) S.A.
Netherlands Branch
Risks Associated with Financial Instruments
Appendix 2
Lombard Odier (Europe) S.A. · Netherlands Branch
Herengracht 466 · 1017 CA Amsterdam · Nederland
Credit institution regulated by the Commission de Surveillance du Secteur Financier (CSSF)
and the Nederlandsche Bank (DNB).
E-mail: [email protected]
January 2014
1.Introduction
The purpose of this document is to provide an investor with guidance on the types of risk relevant to a range of investment products.
The price or value of an investment realized depends on fluctuations in financial markets, which are outside of our control. Investors will appreciate that
past performance of any investment does not provide an indicator of how well it will perform in the future. Investors may lose some or all of their money
depending on the type of investment.
We strongly recommend you acquaint yourself with the risks relevant to any investment you are contemplating. Your Lombard Odier Relationship Manager
will be pleased to provide you additional guidance about the level of risk relevant to specific investments, on a case by case basis.
2.
Financial Instruments and the Risks Involved
1.Shares
Shares represent an interest in the share capital of a company. Regarded from an economic point of view, the shareholder may consider himself
the owner of a part of the capital of a business. Shares can be registered or bearer and involve risk-bearing capital. A shareholder has no right to
the return of capital and the shares could become valueless in the event of bankruptcy of the company. Shareholders may qualify for dividend
payments, but these are paid only at the discretion of the Company’s management. A shareholder’s return from investing in shares derives from the
market value of these shares at the time of sale. The market price is affected by supply and demand that, in turn, is affected by a range of factors
that affect the market in which the company operates and factors in relation to the company itself. The risks of an investment could thus be rather
diverse, depending on, amongst other things, the development of the Company’s activities and the quality of its management.
2.
Depositary Receipts
A Global Depositary Receipt (GDR) or American Depositary Receipt (ADR) is a certificate issued by a Depositary Bank (e.g. JPMorgan Chase, Citigroup),
which represents ownership of an underlying number of shares. They are traded and settled independently of the underlying share and are
commonly used to invest in foreign companies and companies in developing or emerging markets (e.g. Russia). The risks are in principle the same as
the risks attached to the underlying shares.
3.Bonds
Bonds are debentures of a loan issued by a government or corporate institution. The entity (issuer) that has issued the bond will pay interest on the
debt at a pre-defined rate and will redeem the nominal value on a date agreed upon (maturity date).
Bonds may be issued with particular features in relation to interest payment, repayment, and special borrowing conditions. The return on a bond
could, for instance, be dependant on the applicable rate of interest or on the profit of the issuer of the bond (such as profit-sharing bonds and
income bonds). There are also bonds on which no interest is paid (zero coupon bonds). These bonds are issued at prices discounted to their nominal
value, whereby the value realised is the difference between the price purchased and the nominal value redeemable at maturity.
Bonds are traded at prices that may be above or below their nominal value, reflecting their relative attractiveness in relation to prevailing interest
rates. Pricing of bonds can change from day to day and also reflect the creditworthiness of the issuer, which may change if a rating agency changes
its view of the issuer’s financial strength. A rating down grade may make the price of the bond fall. A bond investor is subject to the risk of default of
the issuer and may get back little or none of the principle amount invested in the event of bankruptcy.
4.
Convertible Bonds
A convertible bond, or convertible debenture, is a type of bond that can be converted into shares of stock in the issuer company, usually at a preannounced ratio. It is a hybrid security with debt and equity like features. Although it typically has a low coupon rate, the holder is compensated
with the ability to convert the bond to common shares, usually at a substantial premium to the shares’ market value. From the issuer's perspective,
the key benefit of raising money by selling convertible bonds is reduced cash interest payments. However, in exchange for the benefit of reduced
interest payments, the value of shareholder's equity is reduced due to the stock dilution expected when bondholders convert their bonds into new
shares. Convertible bonds have characteristics of both shares and bonds, hence an investor may also expect risks similar to shares and bonds.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 42
5.Warrants
A warrant is a time-limited right to subscribe for shares, debentures, loan stock or government securities and is exercisable against the original
issuer of the underlying securities. A relatively small movement in the price of the underlying security results in a disproportionately large
movement, unfavourable or favourable, in the price of the warrant. The prices of warrants can therefore be volatile. It is essential for anyone who
is considering purchasing warrants to understand that the right to subscribe to shares conferred by a warrant is usually limited in time, with the
consequence that if the investor fails to exercise this right within the predetermined time-scale the investment becomes worthless. You should not
buy a warrant unless you are prepared to sustain a total loss of the money you have invested plus any commission or other transaction charges.
Transactions in off-exchange warrants may involve greater risk than dealing in exchange traded warrants because there is no exchange market
through which to liquidate your position, or to assess the value of the warrant or the exposure to risk. Bid and offer prices need not be quoted, and
even where they are, they will be established by dealers in these instruments and, consequently, it may be difficult to establish what a fair price is.
6.
Securitised Derivatives
These instruments may give the right to acquire or sell one or more types of investment which is normally exercisable against someone other than
the issuer of that investment. They may also give rights under a contract for difference, which allows for speculation on fluctuations in the value
of an underlying investment of any description or an index, such as the FTSE 100 index. These instruments often involve a high degree of gearing
or leverage, so that a relatively small movement in the price of the underlying investment results in a much larger movement, unfavourable or
favourable, in the price of the instrument. The price of these instruments can therefore be volatile.
These instruments have a limited life, and may (unless there is a guaranteed return to the amount you are investing) expire worthless if the
underlying instrument does not perform as expected. You should only buy this product if you are prepared to sustain a total loss of the money you
have invested plus any commission or other transaction charges.
7.
Off-exchange Transactions in Derivatives
We must make it clear to you if you are entering into an off-exchange derivative transaction. While some off-exchange markets are highly liquid,
transactions in off-exchange or "non transferable" derivatives may involve greater risk than investing in on-exchange derivatives because there is no
exchange market on which to close out an open position. It may be impossible to liquidate an existing position, to assess a fair value or to assess the
exposure to risk. Bid prices and offer prices need not be quoted, and, even where they are, they will be established by dealers in these instruments
and, again, it may be difficult to establish a fair price.
8.
Futures & Forward Contracts
Futures and forward contracts have the same function, being a contract for the purchase or sale of an asset at an agreed price on a specific date.
Futures contracts are exchange traded whilst forwards represent private contracts between two parties off exchange.
Being exchange traded, futures are standardised contracts, whereby daily changes in value are settled each day (marked to market), whereas
forward contracts are bespoke between the two contracting parties and settled only at maturity. Both futures and forwards entail market and credit
risk, though the credit risk is greater on forward contracts, since it represents exposure to the other party, not to that of an exchange clearing house
and does not benefit from daily settlement.
Transactions in futures involve the obligation to make, or to take, delivery of the underlying asset of the contract at a future date, or in some cases
to settle the position with cash. They carry a high degree of risk. The "gearing" or "leverage" often obtainable in futures trading means that a small
margin payment can lead to large losses as well as gains. It also means that a relatively small market movement can lead to a proportionately larger
movement in the value of your investment, and this can work against you as well as for you.
Futures trading based on a margin payment represents a potential contingent liability. This risk is set out under Contingent Liability Investment
Transactions (section 11).
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 43
9.Options
There are many different types of options with different characteristics subject to the following:
Buying Options
Buying an option provides you the right, though not an obligation, to acquire an underlying security or other asset at a future date and at a preagreed price. Buying options involves less risk than writing options because, if the price of the underlying asset moves against you, you can simply
allow the option to lapse. The maximum loss is limited to the premium, plus any commission or other transaction charges. However, if you buy
a call option on a futures contract and you later exercise the option, you will acquire the future. This will expose you to the risks described under
"Futures" and "Contingent Liability Investment Transactions" (sections 8 and 11).
Writing Options
If you write an option, the risk involved is considerably greater than buying options. You may be liable for margin to maintain your position and a
loss may be sustained well in excess of the premium received. By writing an option, you accept a legal obligation to purchase or sell the underlying
asset if the option is exercised against you, however far the market price has moved away from the exercise price. If you already own the underlying
asset which you have contracted to sell (the option is known as a "covered call option") the risk is reduced. If you do not own the underlying asset
("uncovered call options") the risk can be unlimited. Only experienced persons should contemplate writing uncovered options, and then only after
obtaining full details of the applicable conditions and potential risk exposure.
10.
Contracts for Differences
Futures and options contracts that only contemplate cash settlement of the parties’ obligations (rather than physical delivery of the underlying
assets) are known as "contracts for difference". These can be options and futures on indices, as well as currency and interest rate swaps. However,
unlike other futures and options, these contracts can only be settled in cash. Investing in a contract for difference carries the same risks as investing
in a future or an option and you should be aware of these as set out in sections 8 and 9, respectively. Transactions in contracts for differences may
also have a contingent liability and you should be aware of the implications of this as set out in "Contingent Liability Investment Transactions"
(section 11).
11.
Contingent Liability Investment Transactions
Contingent liability investment transactions, which are margined, require you to make a series of payments against the purchase price, instead of
paying the whole purchase price immediately. If you trade in futures contracts for difference or write options, you may sustain a total loss of the
margin you deposit with your firm to establish or maintain a position. If the market moves against you, you may be called upon to pay substantial
additional margin at short notice to maintain the position. If you fail to do so within the time required, your position may be liquidated at a loss and
you will be responsible for the resulting deficit. Even if a transaction is not margined, it may still carry an obligation to make further payments in
certain circumstances over and above any amount paid when you entered into the contract.
12.
Leveraged Investment Products
Typically, these products (marketed under names such as turbo, sprinter or speeder) provide investment in underlying assets such as shares, indices
and currency, whereby the issuer of the product provides leverage by providing the investor additional capital for investment. This loan element in
the investment is subject to a finance cost that is paid by the investor to the issuer.
These products are offered with varying degrees of leverage and follow either a long or a short investment strategy. The nature of this investment
allows the investor to realise greater returns in a rising market than would otherwise be realised by investing without leverage, though losses are
also magnified in a falling market. Generally, these products incorporate a stop loss mechanism so that the investor is not liable to pay additional
capital, except for the financing costs, though could lose the entire investment. Where the assets invested are in a currency different to the
investor’s base currency there is also a risk of losses due to currency exchange rate movements. These products are, generally, only suitable for
experienced investors who would like the opportunity to benefit from short term movements in financial markets.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 44
13.
Collective Investment Schemes
A collective investment scheme (CIS) allows an investor to invest alongside other investors, on a pooled basis, in a range of underlying investments.
A CIS may take the form of a trust, company or partnership, whereby the investor is allocated units, shares or a partnership interest, as applicable,
in accordance with the amount invested. The value of the investment is dependent on the value of underlying assets. The frequency with which
you can redeem your investment is dependant on the constitutional documents of the CIS. Typically, investments may be redeemed in accordance
with the net asset value of a CIS on a daily basis, though for some CIS redemption periods may be only weekly or even longer periods. The level of
investment risk held by a CIS will depend on the underlying investments and how well diversified these investments are.
Some CISs are regulated, requiring their managers to adhere to rules about their constitution, with limits on the types of underlying investment,
the frequency and price at which they may be redeemed. These rules limit the extent the CIS can use leverage and derivatives. Other CIS are
unregulated and, therefore, do not adhere to such rules. The following sections that explain the risks inherent to specific types of unregulated CIS;
hedge funds, private equity and real estate funds.
14.
Hedge Funds
The label of hedge fund is generally given to any collective investment scheme that is not authorised for marketing to the general public and,
typically, they are available only through private subscription. Subscriptions and redemptions may be available once a month or less frequently,
which can make it difficult for an investor to manage exposure to such funds.
Such funds are unrestricted in the investment approach or asset classes, may go short, as well as hold long investment positions, and may use
derivatives and leverage to obtain above average returns. As a consequence, the value of these funds may be extremely volatile and an investor
may lose a significant amount of an investment in a short period of time. Hedge funds also have a reputation for making significant returns and
not all of them follow volatile investment strategies. Nevertheless, you should undertake a thorough assessment of the investment objectives and
approach of such funds before making any investment.
15.
Private Equity Funds
Private equity funds are unregulated CIS that invest in financial instruments issued by companies that are not publicly listed. Sometimes, such funds
acquire publicly listed companies with the intent of de-listing them. The performance of these funds reflects the manager’s ability to influence the
performance of the companies in which they are invested. The nature of an investment in a private equity CIS is usually known as a commitment,
where the investors agrees as amount to invest in the fund, which is drawn down by the fund when required to make the private equity investment.
Private equity funds have a lifespan of several years and it is usually not possible for an investor to redeem his investment until the fund manager
sells the invested company or companies. Whilst returns may be significantly higher than other standard types of equity investment, private equity
funds involve a high degree of risk over a period of several years. This type of investment is only suitable for investors who are prepared to lose all of
their investment.
16.
Real Estate Funds
Real estate funds are unregulated CIS that invest in real estate or companies that invest in real estate. The nature of risk and manner of investment,
by way of commitment, is similar to private equity funds though the nature of investment risk is tied closely to factors affecting real estate,
including downturns in the property market and cash flow risks associated with the ability of tenants to pay rents in commercial property.
17.
Investment in Structured Products
Structured products are designed to fulfil a specific trading or investment objective and may combine features of two or more financial instruments
(for example, an index and a derivative). Derivatives often constitute an element of a structured product, which may also involve an element of
leverage and so relatively small movements in the value of the underlying asset may have a significant effect on the value of the structured product.
Structured products are not, generally, traded on regulated markets and an investor takes on the risk of the counterpart issuing the structured
product. There is no recognized market for these investments and, consequently, it may be difficult for you to deal in the investment or obtain
reliable information of its value or the risks to which it is exposed.
Structured products can provide an element of capital protection, but this is not a guarantee that the full amount will be returned in all
circumstances. Generally, capital protection is only available where the structured product is held to maturity, and is conditional on the
creditworthiness of the counterpart who has issued the product.
Structured products are often high risk investments and you could lose some or the entire principle amount invested in them. There may be specific
risks associated with particular structured products and you should familiarize yourself with them before investing.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 45
18.
Foreign Markets
Foreign markets will involve different risks from your local market. In some cases the risks will be greater and, in particular, emerging markets may
lack the level of transparency, liquidity, efficiency and regulation found in developed markets. On request, we shall provide an explanation of the
relevant risks and protections (if any) which will operate in any foreign markets, including the extent to which we will accept liability for any default
of a foreign firm through whom we deal. The potential for profit or loss from transactions on foreign markets or in foreign denominated contracts
will be affected by fluctuations in currency exchange rates.
19.
Investment in Emerging Markets
Emerging markets may be regarded as countries that possess one or more of the following characteristics:
•
a certain degree of political instability;
•
relatively unpredictable financial markets and economic growth patterns;
•
a financial market that is still at the development stage;
•
a weak economy.
Which are the emerging markets?
The list of emerging markets is constantly changing and such status ascribed according to criteria set by several different organisations, such as the
International Finance Corporation or the World Bank. Broadly, they include any country other than Australia, Austria, Belgium, Canada, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Luxembourg, The Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland, the UK and the United States. These countries’ markets are regarded as developed markets.
What type of risks should I be especially aware of when investing in emerging markets?
When investing in emerging markets, there is a greater emphasis to particular types of risk not generally encountered in more developed markets.
The following is an outline of such risks:
Political Risk
A government’s political inexperience or instability in the political system of the country may increase the risk of short-term fundamental shifts in
the country’s economy and politics. The consequences for you as an investor can include the confiscation of your assets with no compensation, the
restriction of your rights of disposal over your assets, or a dramatic fall in their value.
Economic Risk
Emerging market economies are more sensitive to changes in interest and inflation rates, which are in any case subject to greater swings than in
developed countries. The focus of such economies is often relatively narrow, allowing single events to have a magnified impact.
Credit Risk
Investments in debt paper (e.g. bonds, notes) issued by emerging market governments or companies tend to entail much higher levels of risk than
established market debt. This can be due to inferior creditworthiness, a high level of government debt or a lack of market transparency.
Exchange Rate Risk
The currencies of emerging market countries are subject to major, unpredictable swings in value. Hedging can help limit losses resulting from
currency-swings, but they can never be entirely eliminated.
Market Risk
The lack of sophistication in monitoring their financial markets can result in poor levels of market transparency, liquidity, efficiency and regulation in
emerging market countries.
Legal Risk
In emerging markets there tends to be less government supervision and regulation of business and industry practices. The development of a legal
infrastructure may not be well developed and recognition of private ownership may not be strongly upheld in comparison to developed countries.
As a consequence, your legal rights, including those of ownership, might be difficult or impossible to enforce.
Settlement Risk
Emerging markets may have an array of different clearing and settlement systems, or none at all. These are often outmoded and prone to processing
errors, as well as considerable delays in settlement and delivery.
Depending on the type of investment product, the risks described elsewhere in this Appendix are also relevant.
General Terms and Conditions - Lombard Odier (Europe) S.A. · Netherlands Branch | January 2014 | 46
Luxembourg
Luxembourg
Lombard Odier (Europe) S.A.
5, allée Scheffer · 2520 Luxembourg · Luxembourg
Credit institution regulated by the Commission de Surveillance du Secteur Financier (CSSF).
E-mail: [email protected]
Communication in: FR, EN.
Netherlands
Amsterdam
Lombard Odier (Europe) S.A. · Netherlands branch
Herengracht 466 · 1017 CA Amsterdam · Nederland
Credit institution regulated by the Commission de Surveillance du Secteur Financier (CSSF)
and the Nederlandsche Bank (DNB).
E-mail: [email protected]
Communication in: NL, EN.
Belgium
Brussels
Lombard Odier (Europe) S.A. Luxembourg · Belgium branch
Avenue Louise 81 · Box 12 · 1050 Brussels · Belgium
Credit institution regulated by the Commission de Surveillance du Secteur Financier (CSSF),
the Banque nationale de Belgique (BNB) and the Financial Services and Markets Authority (FSMA)
E-mail: [email protected]
Communication in: FR, FL.
sPAIN
Madrid
Lombard Odier (Europe) S.A. · Sucursal en España
Paseo de la Castellana 66 · 28046 Madrid · España
Credit institution regulated by the Commission de Surveillance du Secteur Financier (CSSF),
Banco de España and the Comisión Nacional del Mercado de Valores (CNMV).
E-mail: [email protected]
Lombard Odier Gestión (España) S.G.I.I.C., S.A.U
Paseo de la Castellana 66 · 28046 Madrid · España
Management Company supervised by the Comisión Nacional del Mercado de Valores (CNMV).
E-mail: [email protected]
Communication in: ES.
United Kingdom
London
Lombard Odier (Europe) S.A. · UK Branch
Queensberry House · 3 Old Burlington Street · London W1S 3AB · England
The bank is authorised and regulated by the Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg
and its branch in the UK by the Prudential Regulation Authority and the Financial Conduct Authority.
Registered in Luxembourg No. B169907
E-mail: [email protected]
Communication in: EN.
www.lombardodier.com
General Terms and Conditions_AMS_EN_01.2014