PRINCIPAL BROCHURE. CHINA CONSTRUCTION BANK (ASIA) CORPORATION LIMITED (the Bank ) Gold Trading 16 October

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PRINCIPAL BROCHURE CHINA CONSTRUCTION BANK (ASIA) CORPORATION LIMITED (the Bank ) Gold Trading 16 October 2014 (a licensed bank incorporated in Hong Kong with limited liability and regulated by the Hong
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PRINCIPAL BROCHURE CHINA CONSTRUCTION BANK (ASIA) CORPORATION LIMITED (the Bank ) Gold Trading 16 October 2014 (a licensed bank incorporated in Hong Kong with limited liability and regulated by the Hong Kong Monetary Authority and registered with the Securities and Futures Commission as a registered institution for carrying on Types 1 and 4 regulated activities under the Securities and Futures Ordinance) The Securities and Futures Commission ( SFC ) has authorized the issue of this Principal Brochure as part of the offering documents for Gold Trading (the Scheme ). The Bank assumes full responsibility for the accuracy of the information contained in the offering documents of the Scheme and confirms that, having made all reasonable enquiries, to the best of its knowledge and belief, there are no other facts the omission of which would make any statement in the offering documents misleading. The SFC does not take any responsibility for the contents of the offering documents of the Scheme, makes no representation as to its accuracy or completeness, and expressly disclaims any liability whatsoever for any loss or damage howsoever arising from or in reliance upon the whole or any part of the contents of the offering documents of the Scheme. The SFC s authorization of the offering documents of the Scheme is not an endorsement or recommendation of the Scheme nor does it guarantee the commercial merits of the Scheme or its performance. It does not mean the Scheme is suitable for all investors nor it is an endorsement of its suitability for any particular investor or class of investors. 1 CONTENTS PART 1 PART 2 PART 3 PART 4 THE KEY FEATURES OF THE SCHEME THE RISKS ASSOCIATED WITH THE SCHEME GENERAL INFORMATION IN RELATION TO THE SCHEME SCENARIO ANALYSIS 2 PART 1 THE KEY FEATURES OF THE SCHEME You should read and understand all the key features of the Scheme prior to deciding whether or not to invest in the Scheme. What is Gold Trading? Securities and Futures (Collective Investment Schemes) Notice prescribes the arrangements for the purchase of gold with certain specified characteristics as paper gold schemes. Such schemes are to be regarded as collective investment schemes and are subject to the regime under Part IV of the Securities and Futures Ordinance ( SFO ) (Cap. 571, Laws of Hong Kong). What is the Scheme about? The Scheme is an investment instrument offered by the Bank (as principal) for investors who desire to buy and sell paper gold pursuant to a contractual term without requiring any physical delivery of gold. You will be required to open a Gold Trading Account ( Account ) with the Bank to undertake buy or sell transaction under the Scheme. The amount receivable by the Bank from you as an investor or payable by the Bank to you is calculated on the basis of the number of units you bought or sold of the Scheme. The Bank s buying price and selling price per unit of the Scheme in HK Dollar ( HKD ) are calculated with reference to the price of Loco London Gold ( Reference Asset ) as explained below. These prices have already incorporated the Bank s profit margins. Reference Asset of the Scheme The Reference Asset is Loco London Gold representing the basis for international trading and settlement in gold in the London bullion market. It is a global over-the-counter gold trading market without geographical constraint. Prices are quoted by market dealers based on US Dollar ( USD ) per ounce. The fineness is not less than 99.5%. Quotation Unit Mechanism of the Scheme The quotation unit of the Scheme is one unit. One unit of the Scheme is equal to one ounce of the Reference Asset. The quotation price of one unit of the Scheme is equal to Loco London Gold price based on USD per ounce after converting into HKD and is subject to the Bank's profit margins. The quotation price of one unit of the Scheme is set out below. The Price of One Unit of the Scheme The price per unit of the Scheme is quoted by the Bank as the Bank s Selling Price or the Bank s Buying Price. The Bank s Selling Price is the price you pay if you wish to buy one unit of the Scheme from the Bank. The Bank s Selling Price is the aggregate of (i) the prevailing offer price of one ounce of the Reference Asset (as provided by Reuters in USD which will be converted into HKD using (a) the foreign currency exchange rate quoted by Reuters or (b) the spot telegraphic transfer foreign currency exchange rate quoted by the Bank, as determined by the Bank at its sole discretion in good faith and commercially reasonable manner) and (ii) the Bank s profit margins. In case Reuters cannot provide the price of the Reference Asset, the Bank will adopt the prevailing offer price of one ounce of the Reference Asset in USD provided by market dealers and convert into HKD using the spot telegraphic transfer foreign currency exchange rate quoted by the Bank. The Bank s profit margin would not exceed 1% of the Bank's Selling Price per unit of the Scheme from time to time (e.g. if the offer price of one ounce of the Reference Asset is HKD9,900.00, the Bank's profit margin will not exceed HKD and the Bank's Selling Price will not exceed HKD10,000.00). 3 The Bank s Buying Price is the price you receive if you wish to sell one unit of the Scheme to the Bank. The Bank s Buying Price is the prevailing bid price of one ounce of the Reference Asset (as provided by Reuters in USD which will be converted into HKD using (i) the foreign currency exchange rate quoted by Reuters or (ii) the spot telegraphic transfer foreign currency exchange rate quoted by the Bank, as determined by the Bank at its sole discretion in good faith and commercially reasonable manner) less the Bank s profit margins. In case Reuters cannot provide the price of the Reference Asset, the Bank will adopt the prevailing bid price of one ounce of the Reference Asset in USD provided by market dealers and convert into HKD using the spot telegraphic transfer foreign currency exchange rate quoted by the Bank. The Bank s profit margin would not exceed 1% of the Bank's Buying Price per unit of the Scheme from time to time (e.g. if the bid price of one ounce of the Reference Asset is HKD10,100.00, the Bank's profit margin will not exceed HKD and the Bank's Buying Price will not be below HKD10,000.00). The Bank s Selling Price and Buying Price are rounded to 2 decimal places with or above being rounded upwards and with below being rounded downwards (e.g. if the Bank s Selling Price is HKD10, , it will be quoted as HKD10, and if the Bank s Selling Price is HKD10, , it will be quoted as HKD10,000.03). NO Physical Delivery of Gold Under the Scheme, no physical delivery of gold is required from you, and you cannot demand physical delivery of gold. Further, you have no right, ownership and possession of any physical gold. The allocation of units in your Account under the Scheme is notional. The unit price of the Scheme is calculated with reference to the price of Reference Asset and incorporates the Bank s profit margins. NOT Principal Protected Your investments in the Scheme are NOT principal protected. In the worst case scenario, you may lose your entire principal. Delivery and Realization There will be NO physical delivery of gold for each transaction under the Scheme. The Bank will not hold any physical gold under the Scheme. Realisation of your investment is effected through the sale of units of the Scheme and the sales proceeds will be credited to your Account with the Bank on the day the sale order is executed. Amendment to the Terms and Conditions of the Scheme The Bank reserves the right to amend the terms and conditions of the Scheme as set out in the Bank s Terms and Conditions for Gold Trading (as amended from time to time. Any amendment will be made by the Bank in its absolute discretion (acting in good faith and in a commercially reasonable manner) with at least 1 month s prior written notice to you. Copies of the Bank s Terms and Conditions for Gold Trading are available at the Bank s branches and website (www.asia.ccb.com) free of charge. Governing Law of the Scheme The Scheme is governed by the laws of Hong Kong Special Administrative Region of the People s Republic of China ( Hong Kong ). The Major Features of the Scheme Product Name: Product Type: Gold Trading Paper gold scheme 4 Account Type: Account Mechanism: Currency Denomination: Reference Asset: Quotation Unit Mechanism: Pricing Mechanism: A non-interest bearing account Your investments in the Scheme will be made through a noninterest bearing Account under the Scheme in units. The purchase of units of the Scheme will be credited to this Account, and the sale of units of the Scheme will be debited from it. The transactions under the Scheme are executed by the Bank as principal. The selling and buying prices per unit of the Scheme are denominated in HKD. Loco London Gold. It represents the basis for international trading and settlement in gold in the London bullion market and is a global over-the-counter gold trading market without geographical limitation, where quotes are made by market dealers based on USD per ounce. The fineness is not less than 99.5%. The quotation unit of the Scheme is one unit. One unit of the Scheme is equal to one ounce of the Reference Asset. The quotation price of one unit of the Scheme is equal to Loco London Gold price based on USD per ounce after converting into HKD and is subject to the Bank's profit margins. The price per unit of the Scheme is quoted by the Bank as the Bank s Selling Price and the Bank s Buying Price respectively. The Bank s Selling Price is the price you pay if you wish to buy one unit of the Scheme from the Bank. The Bank s Selling Price is the aggregate of (i) the prevailing offer price of one ounce of the Reference Asset (as provided by Reuters in USD which will be converted into HKD using (a) the foreign currency exchange rate quoted by Reuters or (b) the spot telegraphic transfer foreign currency exchange rate quoted by the Bank, as determined by the Bank at its sole discretion in good faith and commercially reasonable manner) and (ii) the Bank s profit margins. In case Reuters cannot provide the price of the Reference Asset, the Bank will adopt the prevailing offer price of one ounce of the Reference Asset in USD provided by market dealers and convert into HKD using the spot telegraphic transfer foreign currency exchange rate quoted by the Bank. The Bank s profit margin would not exceed 1% of the Bank's Selling Price per unit of the Scheme from time to time (e.g. if the offer price of one ounce of the Reference Asset is HKD9,900.00, the Bank's profit margin will not exceed HKD and the Bank's Selling Price will not exceed HKD10,000.00). The Bank s Buying Price is the price you receive if you wish to sell one unit of the Scheme to the Bank. The Bank s Buying Price is the prevailing bid price of one ounce of the Reference Asset (as provided by Reuters in USD which will be converted into HKD using (i) the foreign currency exchange rate quoted by Reuters or (ii) the spot telegraphic transfer foreign currency exchange rate quoted by the Bank, as determined by the Bank at its sole discretion in good faith and commercially reasonable manner) less the Bank s profit margins. In case Reuters cannot provide the price of the 5 Reference Asset, the Bank will adopt the prevailing bid price of one ounce of the Reference Asset in USD provided by market dealers and convert into HKD using the spot telegraphic transfer foreign currency exchange rate quoted by the Bank. The Bank s profit margin would not exceed 1% of the Bank's Buying Price per unit of the Scheme from time to time (e.g. if the bid price of one ounce of the Reference Asset is HKD10,100.00, the Bank's profit margin will not exceed HKD and the Bank's Buying Price will not be below HKD10,000.00). The Bank s Selling Price and Buying Price are rounded to 2 decimal places, with or above being rounded upwards and with below being rounded downwards (e.g. if the Bank s Selling Price is HKD10, , it will be quoted as HKD10, and if the Bank s Selling Price is HKD10, , it will be quoted as HKD10,000.03). Minimum Transaction Amount: Maximum Transaction Amount and Daily Limit: Fees and Charges: Trading Channels: Trading Time: Minimum transaction amount is one unit (or in multiples thereof for each increment) Maximum transaction amount for phone banking and online banking is HKD2,000,000 per transaction and HKD6,000,000 per day respectively. No separate handling fee or charge will be levied on any transactions under the Scheme. In a sale by you, the Bank s profit margin would not exceed 1% of the Bank's Buying Price per unit of the Scheme as applicable from time to time. In a purchase by you, the Bank s profit margin would not exceed 1% of the Bank's Selling Price per unit of the Scheme as applicable from time to time. The Bank may vary or impose fees and charges by giving at least 1 month s prior written notice. Through the Bank s branches, phone banking or online banking. Before placing orders to buy or sell units of the Scheme, you can obtain information on the prevailing unit prices of the Scheme through the Bank s branches, phone or online banking. Branches Monday Friday, 9:00 am to 5:00 pm. (except Hong Kong, US and UK public holidays) Phone banking Monday Friday, 9:00 am to 6:00 pm. (except Hong Kong, US and UK public holidays) Online banking Monday Friday, 9:00 am to 11:00 pm. (except US and UK public holidays) 6 PART 2 THE RISKS ASSOCIATED WITH THE SCHEME You should read and understand the nature of all risks before deciding whether to invest in the Scheme. Understanding Suitability Before Making Investment This is an investment product. The investment in the Scheme is your own decision but you should not invest in it unless the Bank has explained to you that the Scheme is suitable to you having regard to your financial situation, investment experience and investment objectives. Risks Relating to the Scheme NOT Principal Protected Your investments in the Scheme are NOT principal protected. In the worst case scenario, you may lose your entire principal. NOT a Bank Deposit Your investments in the Scheme are NOT and are NOT equivalent to a bank deposit. NOT an Interest-Bearing Account The Account through which your investments in the Scheme are conducted is not an interest-bearing account and provides no yield. NOT Protected Deposit Your investments in the Scheme are NOT protected deposits and are not protected by the Deposit Protection Scheme in Hong Kong. NO Physical Delivery of Gold The Scheme does NOT involve any physical delivery of gold. You do not have any right, ownership and possession of any physical gold. The allocation of units in your Account is notional. The unit prices of the Scheme are calculated with reference to the price of the Reference Asset and incorporate the Bank s profit margins. There is NO collateral The Scheme is NOT secured on any assets or any collateral of the Bank. NO Guarantee The Scheme does NOT guarantee your capital invested nor any return on the capital. NOT the Same as Investment in the Reference Asset Investing in the Scheme is NOT the same as investing directly in the Reference Asset. Price changes in the Reference Asset might not be reflected exactly in the price changes of the Scheme due to the mechanism set out in the paragraph entitled Pricing Mechanism under the section The Major Features of the Scheme on page 4 of this Principal Brochure. 7 Volatility of Price The unit prices of the Scheme are calculated with reference to the price of the Reference Asset and incorporate the Bank s profit margins. You should recognize that the unit prices of the Scheme are volatile due to price changes in the Reference Asset which may depend on the demand and supply of the Reference Asset and may go up and down. You will bear potential losses due to fluctuations in the unit prices of the Scheme. Such price fluctuations may exceed your expectation and the losses may substantially reduce your capital invested and earnings (if any). Market Risk The price of the Reference Asset may go up and down due to movements in macroeconomic factors which include but are not limited to interest rates, inflation, economic growth and geopolitical tension. The unit prices of the Scheme are calculated with reference to the price of the Reference Asset and incorporate the Bank s profit margins, your investments in the Scheme are therefore subject to market risk. Concentration Risk You have to be aware of concentration risk in investing in one Reference Asset and are reminded to avoid over-concentration of investment in the Scheme. Investment Risk Investment involves risks and the prices of the Reference Asset may fluctuate. The value of your investments in the Scheme may go up or down, sometimes dramatically. Your investments in the Scheme may even become valueless. In the worst case scenario, losses will be incurred rather than profit made. NOT Listed on any Stock Exchange The Scheme is NOT listed on any stock exchange. Risks relating to the Reference Asset Demand and Supply The Reference Asset of the Scheme is Loco London Gold. Gold is a physical commodity and its supply is limited. The price of gold is subject to demand and supply. The demand and supply of gold will thus have an impact on the prices of the Scheme. Risks relating to the Bank Credit Risk of the Bank Your investments in the Scheme are subject to the credit risk of the Bank. Material adverse changes in the financial position of the Bank may impair or affect its ability to meet its obligations under the Scheme. Insolvency Risk of the Bank There is no assurance of protection against a default by the Bank in respect of its payment obligations. If you invest in the Scheme, you are relying upon the creditworthiness of the Bank and of no other person. If the Bank becomes insolvent or default in its obligations under the Scheme, you can only claim as the Bank s unsecured creditor. In the worst case scenario, you may lose your capital invested and all earnings (if any). 8 Early Termination Risk Termination of Scheme The Bank has the right to terminate the Scheme in good faith and in a commercially reasonable manner with at least 3 months' prior written notice to you. Termination of Account The Bank may terminate your Account in good faith and in a commercially reasonable manner by giving at least 1 month's prior notice in writing to you. The Bank also has the right to terminate your Account at any time in good faith and in a commercially reasonable manner in the circumstances as described under the Bank s Terms and Conditions for Gold Trading. The circumstances are as follows: (i) if the Account is suspected of being used for illegal activities or if any change of law prohibits or renders illegal the maintenance or operation of the Scheme and/or the Account; (ii) if, in the opinion of the Bank, you commit any material breach of the Bank's Terms and Conditions for Gold Trading; (iii) if any acknowledgement, representation or warranty by you is or becomes materially incorrect (including if you become a U.S. person after opening your Account); or (iv) if the Account carries a zero balance for the minimum period determined by the Bank from time to time. U.S. persons are those within the meaning of Regulation S under the Securities Act of the United States (which includes any person resident in the United States of America and any partnership or corporation organized or incorporation organized or incorporated under the laws of the United States of America), and a U.S. citizen or resident for U.S. tax purposes. In such scenarios as stated above for termination of Account and/or Scheme, if you could not sell your units in the Scheme back to the Bank before the termination date, the amount payable by the Bank back to you on such termination will be the prevailing Bank s Buying Price of your units in the Scheme as
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