Precious Metal Services


What is this Paper Precious Metal Scheme?

This Paper Precious Metal Scheme is an investment instrument made available by the Bank to the market for investors who are interested in buying and/ or selling paper precious metal without involving in any physical delivery of any precious metal.

What are your choices of the Denomination Currency of this Paper Precious Metal Scheme?

The Denomination Currency at your choice can be USD or Renminbi (“RMB”). You should note that you can only sell the unit(s) of a Paper Precious Metal in the same Denomination Currency that you purchase such unit(s) of Paper Precious Metal.

How do you conduct a transaction under this Paper Precious Metal Scheme?

You need to open a non-interest bearing account, namely “Paper Precious Metal Scheme Account”, and open a saving account as the settlement account with the Bank for any buy or sell transaction under this Paper Precious Metal Scheme. We offer 9 types of Paper Precious Metal Scheme Accounts under this Paper Precious Metal Scheme:

Account Name of Paper Precious Metal Scheme Denomination Currency Type of Paper Precious Metal Scheme
Multi-Currency Paper Silver Scheme (Ounce) USD denominated transactions Designated for the Reference Asset is silver, with the Quotation Unit Mechanism on a per ounce basis.
Renminbi Paper Silver Scheme (Ounce) RMB denominated transactions Designated for the Reference Asset is silver, with the Quotation Unit Mechanism on a per ounce basis.
Renminbi Paper Silver Scheme (Gram) RMB denominated transactions Designated for the Reference Asset is silver, with the Quotation Unit Mechanism on a per gram basis.
Multi-Currency Paper Platinum Scheme (Ounce) USD denominated transactions Designated for the Reference Asset is platinum, with the Quotation Unit Mechanism on a per ounce basis.
Renminbi Paper Platinum Scheme (Ounce) RMB denominated transactions Designated for the Reference Asset is platinum, with the Quotation Unit Mechanism on a per ounce basis.
Renminbi Paper Platinum Scheme (Gram) RMB denominated transactions Designated for the Reference Asset is platinum, with the Quotation Unit Mechanism on a per gram basis.
Multi-Currency Paper Palladium Scheme (Ounce) USD denominated transactions Designated for the Reference Asset is palladium, with the Quotation Unit Mechanism on a per ounce basis.
Renminbi Paper Palladium Scheme (Ounce) RMB denominated transactions Designated for the Reference Asset is palladium, with the Quotation Unit Mechanism on a per ounce basis.
Renminbi Paper Palladium Scheme (Gram) RMB denominated transactions Designated for the Reference Asset is palladium, with the Quotation Unit Mechanism on a per gram basis.

The purchase or sale of units of any Paper Precious Metal will be credited to or debited from the corresponding Paper Precious Metal Scheme Account. The amount receivable by the Bank from you or the amount payable by the Bank to you is based on the number of units you bought or sold under this Paper Precious Metal Scheme. The buying and selling prices per unit of a Paper Precious Metal are calculated by reference to the prevailing market price of the relevant Reference Asset (and are subject to the prevailing exchange rate of the Denomination Currency and the Bank’s profit margins). As such, the relevant amount receivable or payable by the Bank (as the case may be) will be debited from, or credited to, your designated settlement account denominated in the same currency as the Denomination Currency of the relevant Paper Precious Metal you bought or sold.

Is there any physical delivery of the precious metal?

This Paper Precious Metal Scheme does not involve physical delivery of any precious metal. You do not have any rights, ownership or possession of any physical precious metal. The allocation of units in any Paper Precious Metal Scheme Account under this Paper Precious Metal Scheme is notional. The buying or selling price per unit of a Paper Precious Metal is calculated by reference to the prevailing market price of the corresponding Reference Asset and is subject to the prevailing exchange rate of the Denomination Currency and the Bank’s profit margins.

In determining the buying or selling price for RMB denominated Paper Precious Metals, the offshore RMB exchange rate will be applied in respect of the USD/RMB exchange rate.

Is there any guarantee or collateral?

There is NO guarantee on the capital invested by you. This Paper Precious Metal Scheme is NOT secured on any assets or any collateral of the Bank.

What is the governing law of this Paper Precious Metal Scheme?

This Paper Precious Metal Scheme is governed by the laws of Hong Kong Special Administrative Region (“HKSAR”) of the People’s Republic of China (“PRC”).

What are the key features of this Paper Precious Metal Scheme?

Product Name: Paper Precious Metal Scheme
Product Type: Paper Silver, Paper Platinum and Paper Palladium (each a “Paper Precious Metal”) linked to a corresponding Reference Asset
Account Type: A non-interest bearing account
Account Name: Paper Precious Metal Scheme Account
Account Mechanism:

Your investments in this Paper Precious Metal Scheme will be conducted through a non-interest bearing account. The purchase of units of any Paper Precious Metal will be credited to, while the sale of units of such corresponding Paper Precious Metal will be debited to, this non-interest bearing account. We offer 9 types of Paper Precious Metal Scheme Accounts under this Paper Precious Metal Scheme:

  • Multi-Currency Paper Silver Scheme (Ounce) – This account is designated for USD denominated transactions where the Reference Asset is silver, with the Quotation Unit Mechanism on a per ounce basis.
  • Renminbi Paper Silver Scheme (Ounce) – This account is designated for RMB denominated transactions where the Reference Asset is silver, with the Quotation Unit Mechanism on a per ounce basis.
  • Renminbi Paper Silver Scheme (Gram) – This account is designated for RMB denominated transactions where the Reference Asset is silver, with the Quotation Unit Mechanism on a per gram basis.
  • Multi-Currency Paper Platinum Scheme (Ounce) – This account is designated for USD denominated transactions where the Reference Asset is platinum, with the Quotation Unit Mechanism on a per ounce basis.
  • Renminbi Paper Platinum Scheme (Ounce) – This account is designated for RMB denominated transactions where the Reference Asset is platinum, with the Quotation Unit Mechanism on a per ounce basis.
  • Renminbi Paper Platinum Scheme (Gram) – This account is designated for RMB denominated transactions where the Reference Asset is platinum, with the Quotation Unit Mechanism on a per gram basis.
  • Multi-Currency Paper Palladium Scheme (Ounce) – This account is designated for USD denominated transactions where the Reference Asset is palladium, with the Quotation Unit Mechanism on a per ounce basis.
  • Renminbi Paper Palladium Scheme (Ounce) – This account is designated for RMB denominated transactions where the Reference Asset is palladium, with the Quotation Unit Mechanism on a per ounce basis.
  • Renminbi Paper Palladium Scheme (Gram) – This account is designated for RMB denominated transactions where the Reference Asset is palladium, with the Quotation Unit Mechanism on a per gram basis.
Denomination Currency:
Buying and selling prices per unit of any of the Paper Precious Metal can be denominated in RMB or USD. In determining the buying or selling price for RMB denominated Paper Precious Metal, the offshore RMB exchange rate will be applied in respect of the USD/RMB exchange rate.
Reference Asset: You may choose any of the following precious metals as a Reference Asset under this Paper Precious Metal Scheme:
  • Silver - Loco London Silver as specified by the LBMA, which is quoted in USD per ounce. The fineness must not be less than 99.9%.
  • Platinum – Platinum as specified by the LPPM, which is quoted in USD per ounce. The fineness must not be less than 99.95%.
  • Palladium - Palladium as specified by the LPPM, which is quoted in USD per ounce. The fineness must not be less than 99.95%.
Quotation Unit: In respect of each Paper Precious Metal, one unit of the relevant Paper Precious Metal.
Quotation Unit Mechanism: In respect of each Paper Precious Metal, one unit of the relevant Paper Precious Metal is equal to a specified quantity of the corresponding Reference Asset as follows:
  • RMB denominated Paper Precious Metal - If the Denomination Currency of the relevant Paper Precious Metal is RMB, the Paper Precious Metal will be quoted on a per Quotation Unit basis as equal to (i) one ounce of the corresponding Reference Asset, or (ii) one gram of the corresponding Reference Asset respectively. You may elect for the Quotation Unit Mechanism on a per ounce or per gram basis in your purchase and/or sale of the relevant RMB denominated Paper Precious Metal.
 
Each Reference Asset is currently quoted by LBMA or LPPM (as the case may be) on a per ounce basis only. The ratio of one ounce to one gram is:

1 ounce = 31.1035 gram

If you elect to purchase or sell a RMB denominated Paper Precious Metal using the Quotation Unit Mechanism on a per gram basis, you need to convert the price per unit of such Paper Precious Metal from gram to the corresponding quantity of ounce to compare the price of such Paper Precious Metal with the price of the corresponding Reference Asset quoted on LBMA or LPPM (as the case may be).

  • Non-RMB denominated Paper Precious Metal - If the Denomination Currency of the relevant Paper Precious Metal is not RMB, such Paper Precious Metal will only be quoted on a per Quotation Unit basis as equal to one ounce of the corresponding Reference Asset.
 
Pricing Mechanism: In respect of each Paper Precious Metal, the price per unit of the relevant Paper Precious Metal is referred to as a “buying price” if you would like to buy one unit of such Paper Precious Metal from the Bank. Conversely, the price per unit of such Paper Precious Metal is referred to as a “selling price” if you would like to sell one unit of such Paper Precious Metal to the Bank.
The buying or selling price per unit of each Paper Precious Metal is calculated by reference to the prevailing market price of the corresponding Reference Asset and is subject to the prevailing exchange rate of the Denomination Currency and the Bank’s profit margins. In determining the buying or selling price for RMB denominated Paper Precious Metal, the offshore RMB exchange rate will be applied in respect of the USD/RMB exchange rate.
Minimum Transaction Amount:

In respect of each RMB denominated Paper Precious Metal with the Quotation Unit Mechanism on a per gram basis, the minimum transaction amount is one unit of the relevant Paper Precious Metal (with multiples thereof for each increment).

In respect of each RMB denominated Paper Precious Metal with the Quotation Unit Mechanism on a per ounce basis, the minimum transaction amount is one tenth (ie. 0.1) of a unit of the relevant Paper Precious Metal (with multiples thereof for each increment).

In respect of each USD denominated Paper Precious Metal, the minimum transaction amount is one tenth (ie. 0.1) of a unit of the relevant Paper Precious Metal (with multiples thereof for each increment).
Fees and Charges:
There are no handling fees or charges for any transaction placed under this Paper Precious Metal Scheme. The Bank’s profit margins are embedded in the buying or selling price per unit of each Paper Precious Metal. The Bank may vary or impose further fees and charges by giving at least 30 calendar days’ prior written notice.
Trading Means:
Through the Bank’s e-banking platform. Before placing buy and sell orders under this Paper Precious Metal Scheme, you can obtain information on the prevailing prices of the Paper Precious Metal through the Bank’s e-banking.
Trading Time: E-Banking:
Monday 8:00am to Saturday 3:30am
The Bank may change the trading time from time to time.

Scenario Analysis

  • Hypothetical Examples for an investment with USD as the Denomination Currency

The following scenarios are based on an investment with (i) USD as the Denomination Currency and (ii) Silver as the corresponding Reference Asset.

Scenario 1 – Unit Price of Paper Silver rises (Gain scenario)

Assuming the investor bought 100 units of the Paper Silver at USD 31 per unit. Later, the unit price of the Paper Silver rose. The investor sold all the units at USD 33 per unit. The purchase of units was reflected as a credit while the sale of units was reflected as a debit respectively in the investor’s Paper Precious Metal Scheme Account.

You received a realised profit calculated as follows:
=
 (USD 33 – USD 31) per unit x 100 units
=
USD 200

Scenario 2 – Unit Price of Paper Silver falls (Loss scenario)

Assuming the investor bought 100 units of the Paper Silver at USD 33 per unit. Later, the unit price of the Paper Silver fell. The investor sold all the units at USD 31 per unit. The purchase of units was reflected as a credit while the sale of units was reflected as a debit respectively in investor’s Paper Precious Metal Scheme Account.

You suffered a realised loss calculated as follows:
=
(USD31 – USD 33) per unit x 100 units
=
Loss USD 200

Scenario 3 – Unit Price of Paper Silver drops to zero (Worst case scenario)

Assuming the investor bought 100 units of the Paper Silver at USD 33 per unit. Later, the unit price of the Paper Silver dropped to zero per unit. In this scenario, the investor suffered a total loss of his/her entire investment amount.

Scenario 4 – The Bank becomes insolvent or defaults on its obligations (Insolvent or default scenario)

Assuming the Bank becomes insolvent or defaults on its obligations under this Paper Precious Metal Scheme, the investor can only claim as the Bank’s unsecured creditor. In the worst case scenario, the investor may lose his/her entire investment.

  • Hypothetical Examples for an investment with RMB as the Denomination Currency

The following scenarios are based on an investment with (i) RMB as the Denomination Currency, (ii) Silver as the corresponding Reference Asset, and (iii) the Quotation Unit Mechanism on a per gram basis.

Scenario 1 – Unit Price of Paper Silver rises (Gain scenario)

Assuming the investor bought 100 units (on a per gram basis) of the Paper Silver at RMB 6.5 per unit (on a per gram basis). Later, the unit price of the Paper Silver rose. The investor sold all the units at RMB 7.5 per unit (on a per gram basis). The purchase of units was reflected as a credit while the sale of units was reflected as a debit respectively in the investor’s Paper Precious Metal Scheme Account.

You received a realised profit calculated as follows:
=
(RMB 7.5 – RMB 6.5) per unit* x 100 units
=
RMB 100

Scenario 2 – Unit Price of Paper Silver falls (Loss scenario)

Assuming the investor bought 100 units (on a per gram basis) of the Paper Silver at RMB 7.5 per unit (on a per gram basis). Later, the unit price of the Paper Silver fell. The investor sold all the units at RMB 6.5 per unit (on a per gram basis). The purchase of units was reflected as a credit while the sale of units was reflected as a debit respectively in investor’s Paper Precious Metal Scheme Account.

You suffered a realised loss calculated as follows:
=
(RMB 6.5 – RMB 7.5) per unit* x 100 units
=
Loss RMB 100

Scenario 3 – Unit Price of Paper Silver drops to zero (Worst case scenario)

Assuming the investor bought 100 units (on a per gram basis) of the Paper Silver at RMB 6.5 per unit (on a per gram basis). Later, the unit price of the Paper Silver dropped to zero per unit (on a per gram basis). In this scenario, the investor suffered a total loss of his/her entire investment amount.

Scenario 4 – The Bank becomes insolvent or defaults on its obligations (Insolvent or default scenario)

Assuming the Bank becomes insolvent or defaults on its obligations under this Paper Precious Metal Scheme, the investor can only claim as the Bank’s unsecured creditor. In the worst case scenario, the investor may lose his/her entire investment.

Scenario 5 – Illustration of how the Unit Price of the Paper Silver is affected by the prevailing exchange rate and the market price of the corresponding Reference Asset

You should note that the market price of the corresponding Reference Asset (i.e. Silver) is customarily quoted in USD in the international bullion market, while the unit price of the Paper Silver is quoted in RMB. Accordingly, the unit price of the Paper Silver will be affected by (i) the market price of Silver, (ii) the prevailing exchange rate between USD and offshore RMB at the time the unit price is recorded and (iii) the Bank’s profit margins.

The following examples illustrate how the unit price of the Paper Silver will be affected by the market price of Silver and the prevailing exchange rate between USD and offshore RMB. Please note that the following examples do not take into account the Bank’s profit margins.

Assuming that on Day 1, the investor bought 100 units (on a per gram basis) of the Paper Silver at RMB 6.08 per unit (on a per gram basis) which is calculated as follows:

  • Market price of Silver (quoted on a per ounce basis): USD 30.00
  • USD/RMB exchange rate on Day 1: 6.30
  • Unit price of the Paper Silver (on a per gram basis)*: USD 30.00 / 31.1035 x 6.30 = RMB 6.08 (2 decimal places)

Case A – Offshore RMB appreciates against USD by 5% while the market price of Silver remain unchanged

Assuming that on Day 2, the investor sold all the units at RMB 5.79 (on a per gram basis), which is calculated as follows:

  • Market price of Silver (quoted on a per ounce basis): USD 30.00
  • USD/RMB exchange rate on Day 2: 6.00
  • Unit price of the Paper Silver (on a per gram basis)*: USD 30.00 / 31.1035 x 6.00 = RMB 5.79 (2 decimal places)
You suffered a realised loss calculated as follows:
=
(RMB 5.79 – RMB 6.08) per unit* x 100 units
=
Loss RMB29.00

Case B – Offshore RMB appreciates against USD by 5% while the market price of Silver rises by 2%

Assuming that on Day 2, the investor sold all the units at RMB 5.90 (on a per gram basis), which is calculated as follows:

  • Market price of Silver (quoted on a per ounce basis): USD 30.60
  • USD/RMB exchange rate on Day 2: 6.00
  • Unit price of the Paper Silver (on a per gram basis)*: USD 30.60 / 31.1035 x 6.00 = RMB 5.90 (2 decimal places)
You suffered a realised loss calculated as follows:
=
(RMB 5.90 – RMB 6.08) per unit* x 100 units
=
Loss RMB18.00

 

Case C – Offshore RMB appreciates against USD by 5% while the market price of Silver rises by 7%

Assuming that on Day 2, the investor sold all the units at RMB 6.19 (on a per gram basis), which is calculated as follows:

  • Market price of Silver (quoted on a per ounce basis): USD 32.10
  • USD/RMB exchange rate on Day 2: 6.00
  • Unit price of the Paper Silver (on a per gram basis)*: USD 32.10 / 31.1035 x 6.00 = RMB 6.19 (2 decimal places)
The investor received a realised profit calculated as follows:
=
(RMB 6.19 – RMB 6.08) per unit* x 100 units
=
RMB 11.00

* Quotation Unit is quoted based on a per gram of Loco London Silver basis. The ratio of one ounce to one gram is: 1 ounce = 31.1035 gram.

What are the key risks in the Scheme ?

NOT principal protected.
Your investments in this Paper Precious Metal Scheme are not principal protected. In the worst case scenario, you may lose your entire investment.
NOT a time deposit.
Your investments in this Paper Precious Metal Scheme are not a time deposit.
NOT an interest-bearing account.
The account through which the investment in this Paper Precious Metal Scheme is conducted is not an interest-bearing account with neither yield nor interest.
NOT protected deposit.
Your investments in this Paper Precious Metal Scheme are not protected deposits and are not protected by the Deposit Protection Scheme in Hong Kong.
No physical delivery of any precious metal.
This Paper Precious Metal Scheme does not involve physical delivery of any precious metal. You do not have any rights, ownership and possession of any physical precious metal. The allocation of units of any Paper Precious Metal in the account under this Paper Precious Metal Scheme is notional. The buying or selling price per unit of any Paper Precious Metal is calculated by reference to the prevailing market price of the relevant Reference Asset and is subject to the prevailing exchange rate of the Denomination Currency and the Bank’s profit margins.
There is NO collateral.
This Paper Precious Metal Scheme is NOT secured on any assets or any collateral of the Bank.
Not the same as investment in any precious metal.
Investing in this Paper Precious Metal Scheme is not the same as investing in any precious metal. Changes in the market price of the relevant precious metal might not lead to corresponding change in the market value of your investments under this Paper Precious Metal Scheme.
Volatility of precious metal price.
The buying or selling price per unit of a Paper Precious Metal is calculated by reference to the prevailing market price of the relevant Reference Asset and is subject to the prevailing exchange rate of the Denomination Currency and the Bank’s profit margins. The prevailing market price of the relevant Reference Asset can be very volatile due to a variety of factors that are unpredictable, including but not limited to interest rate movement, inflation, economic growth and geopolitical tension. Your investments in this Paper Precious Metal Scheme are subject to market risk.
Exchange rate risk.
If the Denomination Currency is not your home currency, you will be further exposed to the exchange rate risk when you convert it back to your home currency.
Investment risk.
Investment involves risks and the prevailing market price of the relevant Reference Asset under this Paper Precious Metal Scheme may fluctuate. The value of your investments in this Paper Precious Metal Scheme may move up or down, sometimes dramatically, and may even become valueless. In the worst case scenario, you may lose your entire investment.
This Paper Precious Metal Scheme is not listed on any stock exchange.
This Paper Precious Metal Scheme is not listed on any stock exchange.
Risks relating to RMB denominated Paper Precious Metals
Exchange rate risk.
Your investment in the RMB denominated Paper Precious Metal is subject to the exchange rate risk. The market price of the relevant Reference Asset under this Paper Precious Metal Scheme is customarily quoted in USD in the international bullion market. If you choose RMB as the Denomination Currency, your investments in this Paper Precious Metal Scheme will be subject to the prevailing exchange rate risk between USD and offshore RMB. For instance, you may suffer a loss in your investment under this Paper Precious Metal Scheme if the offshore RMB appreciates against USD more (in percentage terms) than the increase in the market price of the relevant Reference Asset. If RMB is not your home currency, you will be further exposed to the exchange rate risk when you convert it back to your home currency. You may make a gain or loss for your investments in the RMB denominated Paper Precious Metal due to the exchange rate fluctuations.
Risk relating to RMB. If the Denomination Currency of a Paper Precious Metal is RMB, you should note that the value of RMB against other foreign currencies fluctuates and will be affected by, amongst other things, the PRC government’s control (for example, the PRC government regulates conversion between CNY and foreign currencies both in Hong Kong and the PRC), which may adversely affect your investments under this Paper Precious Metal Scheme. You should also note that RMB is currently not freely convertible and conversion of RMB through banks in Hong Kong is currently subject to certain restrictions. In particular, the conversion of RMB by a Hong Kong resident is subject to a daily conversion limit. If you are a Hong Kong resident and intend to convert an amount of RMB from/to another currency exceeding such daily conversion limit, you should allow sufficient period to enable the conversion of the amount of RMB exceeding such daily conversion limit, taking into account the maximum amount of RMB that permitted to convert on each day.
There is no guarantee that RMB will not depreciate against USD or your home currency. You may suffer a loss if you convert another currency into RMB so as to invest in any RMB denominated Paper Precious Metal and subsequently convert the realisation proceeds in RMB back into such currency.
In addition, in determining the buying or selling price for RMB denominated Paper Precious Metal, the spot telegraphic transfer offshore RMB exchange rate will be applied in respect of the USD/RMB exchange rate. You should note that although both onshore RMB and offshore RMB are the same currency, they are traded in different and separated markets. As the two markets operate independently where the flow between them is highly restricted, onshore RMB and offshore RMB are currently traded at different exchange rates and their movements may not be in the same direction or scale. The exchange rate for offshore RMB may be trading at a premium or discount to the exchange rate for onshore RMB and there may be significant bid and offer spreads. The value of your units of, and your investment in, the relevant RMB denominated Paper Precious Metal may accordingly fluctuate.
Risks relating to each Reference Asset
Risks relating to the commodity market.
You may choose Silver, Platinum or Palladium as a Reference Asset of this Paper Precious Metal Scheme. Each Reference Asset is a physical commodity and is limited in supply. Commodity markets are generally subject to greater risks than other markets, including potentially significant legal risks. The price of the relevant Reference Asset may be highly volatile. Price movements of the relevant Reference Asset are influenced by, among other thing, interest rates, exchange rates, inflation, changing market supply and demand relationships, fiscal, monetary and exchange control programmes and policies of governments, as well as international political, military and economic events and policies.
Risks relating to Silver as a Reference Asset.
Silver is exposed to movements in both the investment markets and industrial markets as it is used by investors to hedge against inflation or foreign exchange risks, and a relatively high proportion of overall demand of silver is for industrial usages. This may cause the price of Silver to fluctuate differently to other precious metals, such as gold, for which a larger proportion of overall demand is for investment purposes.
Risks relating to Platinum or Palladium as a Reference Asset.
Platinum and Palladium are produced by significantly fewer countries than Silver, with South Africa and Russia being the main production countries. These countries are emerging markets and therefore are exposed to greater risk of a disruption to production than established markets. For example, global or regional political, economic or financial events and situations, particularly war, terrorism, expropriation and other activities which might lead to disruptions to supply from these emerging market countries that are major producer countries of Platinum and Palladium. If there is a shortage of physical Platinum or Palladium, this could cause a significant adverse impact on liquidity in the underlying Platinum or Palladium market and therefore on the price of Platinum or Palladium.
Risks relating to the Bank
Credit risk of the Bank.
Your investments in this Paper Precious Metal Scheme are subject to credit 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 this Paper Precious Metal Scheme, you are relying upon the creditworthiness of the Bank and of no other person. If the Bank becomes insolvent or defaults on its obligations under this Paper Precious Metal Scheme, you can only claim as the Bank’s unsecured creditor. In the worst case scenario, you may lose your entire investment.
Early termination risk.
The Bank may terminate this Paper Precious Metal Scheme in good faith and in a commercially reasonable manner with at least 30 calendar days’ prior notice to you, or upon the occurrence of certain events (such as the occurrence of an event of default in respect of you). In such scenario, you will receive an amount determined by the Bank in its good faith based on the prevailing circumstances, which may be substantially less than your original investments in this Paper Precious Metal Scheme.
Risk relating to the Bank’s hedging activities.
The Bank may enter into hedging transactions, which typically involve the establishment of long and/or short positions in the relevant Reference Asset, with its respective hedging counterparties in the market. It is possible that these activities could adversely affect the prevailing market price of the relevant Reference Asset if the size of hedging transaction is substantial. As such the price of the Paper Precious Metal calculated with reference to the prevailing market price of the relevant Reference Asset will be affected as well. The value of your investments in the Paper Precious Metal may move up and down.
Set-off and Lien.
The Bank has the right to combine or consolidate any balances standing to the credit of your account under this Paper Precious Metal Scheme to set-off against any indebtedness owed by you to the Bank. Under the terms and conditions governing the account under this Paper Precious Metal Scheme, the Bank may at any time and without prior notice, apply the value (as determined by the Bank) of the Paper Precious Metal standing to the credit of your account towards discharge of any of your liabilities owed to the Bank.
Conflicts of interest.
Potential and actual conflicts of interest may arise from the different roles played by the Bank and the Bank’s subsidiaries and affiliates in connection with this Paper Precious Metal Scheme. Although the Bank’s economic interests in each role may be adverse to your interests in this Paper Precious Metal Scheme, the Bank sets the necessary regulatory information barriers among its different business areas as well as formulates policies and procedures for minimizing and managing such conflicts of interest, so as to comply with applicable laws and regulations, and to ensure the Bank’s transactions or dealings will be transacted at arm’s length.

Important Notice

The above risk disclosure statements cannot disclose all the risks involved. Before making investment decision, you should thoroughly study the offering documents, financial reports and relevant risk disclosure statements issued by the issuer of the investment product(s). Further you should consider your own circumstances including financial position, investment experience and objective to ensure the investment is suitable for your particular investment needs and risk tolerance capacity. You should seek independent financial and professional advice before trading or investment. This promotional material does not constitute an offer or solicitation for the purchase or sales of any investment products. This promotional material is issued by Industrial and Commercial Bank of China (Asia) Limited (the “Bank”) and the contents have not been reviewed by Securities and Futures Commission.