Investor Characterization Survey

In order to enhance protection for you, the Securities and Futures Commission (“SFC”) issues an “Investor Characterization” requirement to assess a client’s knowledge of derivatives and to characterize the client based on such knowledge (effective date extended to 4 September 2011). In due course, Client, who wishes to purchase derivative products traded on an exchange but without knowledge of derivatives, shall read and accept the contents of the relevant risks associated with the product to understand the nature and risks of the product prior to a transaction is entered into. Otherwise, the Account will be suspended from trading the derivative products where the Company shall not be liable for any losses of potential gains from the restriction.

The latest information provided by you in the Survey will be updated in your account maintained at Celestial Securities Ltd. You will receive a confirmation notice by email immediately thereafter. Please answer the following questions:

為加強對 閣下的保障,證監會向中介人發出「投資者分類」規定(規定生效日期順延至9月4日),此規定旨在評估客戶對衍生工具的認識,並根據客戶對衍生工具的認識將客戶分類。若 閣下沒有衍生工具知識,但有意認購在交易所買賣的衍生產品,閣下需於進行交易前詳細閱讀及接受就該等產品所附帶的相關風險之全文,以了解該等產品之性質及風險。否則,閣下將不得透過賬戶進行衍生產品買賣,而本公司無需就有關限制引起之任何潛在利潤之損失負責。

我們將根據 閣下在問卷中所提供的資料,為 閣下於時富證券有限公司的賬戶作更新。賬戶更新後, 閣下將會收到確認通知,發送至 閣下於問卷內所登記之電郵地址。 現請回答以下問題:

1.  Have you ever undergone training or attended courses on derivative products with general knowledge of the nature and risks of derivatives?


2. Are you currently or previously working in relation to derivative products?


3. Have you traded at least 5 transactions in any derivative product (whether traded on an exchange or not) within the past 3 years?


The following document is an extract from the HKEx website, a source that Celestial Securities Limited ("CSL") believed to be reliable and accurate at the date indicated. CSL/HKEx do not guarantee its accuracy and accepts no liability (whether in tort or contract or otherwise) for any loss or damage arising from any inaccuracies or omissions. Investor should refer to the full details, including the risk factors, of the relevant listing document or the prospectuses and other documents issued by the issuers and consult their own legal, financial, tax, accounting and other professional advisors prior to making any decision. 

Some Risks Associated with Exchange Traded Funds (ETFs)
1. Market risk 市場風險

ETFs are typically designed to track the performance of certain indices, market sectors, or groups of assets such as stocks, bonds, or commodities. ETF managers may use different strategies to achieve this goal, but in general they do not have the discretion to take defensive positions in declining markets. Investors must be prepared to bear the risk of loss and volatility associated with the underlying index/assets.


2. Tracking errors 追蹤誤差

Tracking errors refer to the disparity in performance between an ETF and its underlying index/assets. Tracking errors can arise due to factors such as the impact of transaction fees and expenses incurred to the ETF, changes in composition of the underlying index/assets, and the ETF manager's replication strategy. (The common replication strategies include full replication/representative sampling and synthetic replication which are discussed in more detail below.)


3. Trading at discount or premium 以折讓或溢價交易

An ETF may be traded at a discount or premium to its Net Asset Value (NAV). This price discrepancy is caused by supply and demand factors, and may be particularly likely to emerge during periods of high market volatility and uncertainty. This phenomenon may also be observed for ETFs tracking specific markets or sectors that are subject to direct investment restrictions. 


4. Foreign exchange risk 外匯風險

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


5. Liquidity risk 流通量風險

Securities Market Makers (SMMs) are Exchange Participants that provide liquidity to facilitate trading in ETFs. Although most ETFs are supported by one or more SMMs, there is no assurance that active trading will be maintained. In the event that the SMMs default or cease to fulfill their role, investors may not be able to buy or sell the product. 


6. Counterparty risk involved in ETFs with different replication strategies 交易所買賣基金的不同複製策略涉及對手風險

  1. Full replication and representative sampling strategies 完全複製及選具代表性樣本策略

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


  2. Synthetic replication strategies 綜合複製策略

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


    1. Swap-based ETFs 以掉期合約構成

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

      總回報掉期(total return swaps)讓交易所買賣基金經理可以複製基金基準的表現而不用購買其相關資產。 以掉期合約構成的交易所買賣基金需承受源自掉期交易商的交易對手風險。若掉期交易商失責或不能履行其合約承諾,基金或要蒙受損失。

    2. Derivative embedded ETFs 以衍生工具構成

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


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


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


It is important that investors understand and critically assess the implications arising due to different ETF structures and characteristics. 


Some Risks Associated with Structured Products

1. Issuer default risk 發行商失責風險

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


Note: "Issuers Credit Rating" showing the credit ratings of individual issuers is now available under the Issuer and Liquidity Provider Information sub-section under Derivative Warrants and under CBBCs section on the HKEx corporate website. 


2. Uncollateralised product risk 非抵押產品風險

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


3. Gearing risk 槓桿風險

Structured products such as derivative warrants and callable bull/bear contracts (CBBCs) are leveraged and can change in value rapidly according to the gearing ratio relative to the underlying assets. Investors should be aware that the value of a structured product may fall to zero resulting in a total loss of the initial investment. 


4. Expiry considerations  有效期的考慮

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


5. Extraordinary price movements 特殊價格移動

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


6. Foreign exchange risk 外匯風險

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


7. Liquidity risk 流通量風險

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


Some Additional Risks Involved in Trading Derivative Warrants

1. Time decay risk 時間損耗風險

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


2. Volatility risk 波幅風險

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


Some Additional Risks Involved in Trading CBBCs
1. Mandatory call risk 強制收回風險

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

投資者買賣牛熊證,須留意牛熊證可以即日「取消」或強制收回的特色。若牛熊證的相關資產值等同上市文件所述的強制收回價/水平,牛熊證即停止買賣。屆時,投資者只能收回已停止買賣的牛熊證由產品發行商按上市文件所述計算出來的剩餘價值 (注意:剩餘價值可以是零)。

2. Funding costs 融資成本

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

I/We confirm that the answers stated in this form are true and correct and I/we authorize the company to verify such information from any source the company may choose.

I/We have been invited to read the risk disclosure statements of derivative products traded on an exchange in a language of my choice, ask questions and take independent advice if I/we wish.

 Accept 同意          Do not accept 不同意

* Attention: Trading of derivative products shall be suspended for client characterized as without derivative knowledge upon effective of such requirement. If you wish to accept the risk disclosure statement later, please contact us directly.

* 請注意: 若閣下沒有衍生工具知識,有關規定實施後,閣下將不得透過賬戶進行衍生產品買賣。日後如需接受風險,請聯絡我們。
Account Type 賬戶類型  
Client Name 客戶名稱
e.g.: Chan Tai Man
Account 戶口號碼
E.g.: 012345
HKID/Passport/BR/CI No.
e.g.: A123456(7)
# Email Address 電郵地址   *
Mobile 手機   *

*   Mandatory field 必須填寫
# Confirmation notice will be sent to  email address 確認通知將發送至此電郵地址。
Regarding the Survey or other enquiries, please feel free to contact our Customer Services Officer at (852) 2663 8888.
關於填寫評估問卷或其他查詢,請致電 (852) 2663-8888與客戶服務主任聯絡。