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Taiwan Stock Exchange Corporation Sample Risk Disclosure Statement for Call (Put) Warrants  CH

Amended Date: 2016.07.21
1     This Risk Disclosure Statement is established in accordance with Article 4 of Taiwan Stock Exchange Corporation Rules Governing Trading of Call (Put) Warrants.
    The trading features of call (put) warrants are different from those of stocks. As regards call (put) warrants, due to the financial leverage in the form of high yields, while there is the opportunity to make a huge profit with limited cost, significant losses may also result within a short term. Before opening an account, you are advised to evaluate carefully whether your own financial capacity and economic condition are suitable for such highly leveraged trading . You are particularly advised to fully understand the following prior to engaging in trading:
  1. As part of the features of call (put) warrants, the object being traded is the right to trade in specific securities. In view of the interaction between the value of the warrants and the price of such specific securities during the existence of the warrants, you are advised to be aware of the impact of price fluctuation of such securities on the call (put) warrants.
  2. Prior to listing, the terms and conditions of issuance of call (put) warrants, such as issue price and exercise ratio, are established by the issuer. After the warrants are listed and traded and freely transferred at the centralized exchange market, their prices are determined according to the supply and demand of the market.
  3. Prior to purchase of call (put) warrants, you are advised to understand the financial and credit position of the issuer n connection with its ability to perform the contract. The Taiwan Stock Exchange does not guarantee the issuer's liability for contract performance.
  4. In the event of mandatory delisting of call (put) warrants due to the issuer's violation of the listing contract or delisting of the underlying securities, the issuer shall recall the call (put) warrants from holders of unexpired warrants at the agreed price under the primary terms and conditions of issuance in order to conclude the contractual obligation of the issuer.
  5. No price fluctuation limit is imposed on call (put) warrants issued over exchange traded funds with foreign component securities, futures exchange traded funds that track a foreign futures index, offshore exchange traded funds, foreign securities, or foreign indices. You should take exchange rates and other risks into account when purchasing call (put) warrants issued over foreign securities or indices.
  6. Where the validity period of knock-out call warrants (callable bull contracts), capped put warrants (callable bear contracts) may be extended, the day on which the closing price of the underlying securities or the closing index of the underlying index reaches the knock-out price or index is deemed the warrant's last trading day; such warrants are deemed to each maturity on the second business day thereafter, and the automatic cash settlement performance method is adopted based on the simple arithmetic mean trade price of the underlying securities or the underlying settlement index on the first business day following the last trading day of the warrant. If there is no trade price for the underlying security, the base auction price for the opening of trading of the underlying security on the expiration date of the warrants shall be used. If the trading of underlying security is halted or suspended on the first business day following the last trading day of the warrants or on the expiry date, the closing price of the underlying security on the last trading day of the contracts shall be used. The aforementioned underlying settlement index shall be calculated in accordance with Article 10, subparagraph 6 of the TWSE Rules Governing Review of Call (Put) Warrant Listings.
    This risk disclosure statement is not inclusive and is not a comprehensive list of all risks of call (put) warrants and factors that may affect market performance. Before making an investment, you should not only carefully review this risk disclosure statement but also be alert to other factors that may cause an impact, and make well-thought financial plans and thorough risk assessment to avoid insufferable losses from hasty or ill-judged decisions on investment.
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    I (the principal) hereby undertake that I shall be solely responsible for the investment risks, that I have received this risk disclosure statement and been provided with explanations by the representative sent by ________ Securities Co., Ltd., and that I fully understand the above risks of trading in call (put) warrants.

    Sincerely,

    Securities Co., Ltd.

    Signature of the principal (undersigned) : ______________
    Date : ______________
    National ID no.:__________________
    TEL: ______________
    Unified business code :__________________
    FAX: ______________
    Representative: ______________
    Address:____________________________________

    (This disclosure statement is executed in duplicate, with one copy to be retained by the securities firm for filing purpose and the other by the investor for reference.)