14 November 2018
Pacific Financial Derivatives Limited has updated its Product Disclosure Statement (PDS). The changes made to this PDS are:Please view our Product Disclosure Statement here
New Wording
3.2 Issuer Risks
Given you are dealing with Pacific Financial Derivatives Ltd as counterparty to every transaction, you will have an exposure to us in relation to each transaction. This is common to all over-the-counter contracts such as Margin Foreign Exchange or Contract for Difference Contracts.
You are subject to Pacific Financial Derivatives Ltd’s credit risk. If we were to become insolvent, we may be unable to meet our obligations to you. Pacific Financial Derivatives Ltd enters into arrangements with financial institutions for the facilitation of transactions and settlements. If the financial conditions of Pacific Financial Derivatives Ltd or the parties with which we hold client assets deteriorate, then you could suffer a loss because the return of your capital and other client’s capital could become difficult.
Pacific Financial Derivatives Ltd’s creditworthiness has not been assessed by an approved rating agency. This means that Pacific Financial Derivatives Ltd has not received an independent opinion of its capability and willingness to repay its debts from an approved source.
Pacific Financial Derivatives Ltd manages its risk exposures by hedging some transactions with a range of counterparties, and also accepts some risk due to the natural hedging that is provided by clients taking positions opposite to other clients. We consider that those client transactions act as a natural hedge against each other. If we do not completely hedge our positions with you, and/or if one of our hedging counterparties fails to make a payment to us, the risk of us being unable to meet our obligations may be increased.
Pacific Financial Derivatives Ltd audited financial statements, can be obtained from the Disclose register at www.disclose-register.companiesoffice.govt.nz. In addition, client funds are held on trust in segregated accounts for our clients and separate to our business operating accounts. Please refer to section 5 for more information.
Previous Wording
3.2 Issuer Risks
Given you are dealing with Pacific Financial Derivatives Ltd as counterparty to every transaction, you will have an exposure to us in relation to each transaction. This is common to all OTC financial market products.
You are subject to Pacific Financial Derivatives Ltd’s credit risk. If we were to become insolvent, we may be unable to meet our obligations to you. Pacific Financial Derivatives Ltd enters into arrangements with third party counterparties for the facilitation of transactions and settlements, and uses money received for margin and settlements to such providers for this purpose. If the financial conditions of Pacific Financial Derivatives Ltd, its counterparties or the parties with which we hold client assets deteriorate, then you could suffer loss because the return of your capital and other clients capital could become difficult.
Pacific Financial Derivatives Ltd’s creditworthiness has not been assessed by an approved rating agency. This means that Pacific Financial Derivatives Ltd has not received an independent opinion of its capability and willingness to repay its debts from an approved source.
New Wording
5. How Pacific Financial Derivatives Treats Funds and Property received from You
Pacific Financial Derivatives Ltd only accepts money and does not accept property, No interest is paid to you on money held in your Trading Account.
Money paid by you to Pacific Financial Derivatives Ltd for margin and fees is held in separate trust accounts for client funds. This money is not regarded as a part of the assets of Pacific Financial Derivatives Ltd and cannot be accessed by Pacific Financial Derivatives Ltd except to pay for hedging contracts with counterparties, fees and margin calls as described in the contract between us. When money is moved from the client trust account to a counterparty it is no longer afforded the protection of being held in trust.
You agree that Pacific Financial Derivatives Ltd may transfer from your Trading Account, moneys to be used for authorised hedging activities. Money may be transferred to a hedging counterparty as is reasonably required for entering into derivatives with the hedging counterparty or for settling or securing those derivatives with the hedging counterparty in accordance with the Act. You agree to such transfers and transactions under our General Terms and Conditions.
Pacific Financial Derivatives Ltd maintains a balance in the client trust account to meet its obligations such as client withdrawals etc. The remaining funds are forwarded to our counterparties and applied against your margin, fee and settlement obligations. It is important to note that holding your money in one or more segregated accounts with our counterparties may not afford you absolute protection.
Pacific Financial Derivatives Ltd enters into arrangements with third party counterparties for the facilitation of transactions and settlements, and uses money received for margin calls and settlements to such providers for this purpose. Accordingly clients are indirectly exposed to the financial risks of our counterparties and organisations with whom Pacific Financial Derivatives Ltd holds client funds. If the financial condition of Pacific Financial Derivatives Ltd or assets of our counterparties or the parties with which we hold client assets deteriorate, then clients could suffer loss because the return of the client capital could become difficult.
Client trades can only be placed when there are cleared funds in the client’s account. Accordingly, no scenario is anticipated which would result in a shortfall in the client trust account, and in the event that there was, Pacific Financial Derivatives Ltd would immediately deposit its own funds to meet this shortfall.
The hedging counterparties that Pacific Financial Derivatives Ltd hedges with are:
1. CFH Clearing Limited - https://www.cfhclearing.com/
2. Forex Capital Markets Ltd - https://www.fxcm.com/uk/
3. Squared Financial Services Ltd - https://squaredfinancial.com/
4. LMAX Limited - https://www.lmax.com/
5. Velocity Trade International - http://www.velocitytrade.com/
6. Advanced Markets LLC. - http://advancedmarketsfx.com/
7. JFD Brokers Ltd-https://www.jfdbrokers.com/
8. Global Prime Pty Ltd-https://www.globalprime.com.au/
9. Invast Financial Services Pty Ltd-http://www.invast.com.au/
Previous Wording
5. How Pacific Financial Derivatives Treats Funds and Property received from You
Pacific Financial Derivatives Ltd only accepts money and does not accept property.
Money paid by you to Pacific Financial Derivatives Ltd for margin and fees is held in separate trust accounts for client funds. This money is not regarded as a part of the assets of Pacific Financial Derivatives Ltd and cannot be accessed by Pacific Financial Derivatives Ltd except to pay for hedging contracts with counterparties, fees and margin calls as described in the contract between us. When money is moved from the client trust account to a counterparty it is no longer afforded the protection of being held in trust.
You agree that Pacific Financial Derivatives Ltd may transfer from your Trading Account, moneys to be used for authorised hedging activities. Money may be transferred to a hedging counterparty as is reasonably required for entering into derivatives with the hedging counterparty or for settling or securing those derivatives with the hedging counterparty in accordance with the Act. You agree to such transfers and transactions under our General Terms and Conditions.
Pacific Financial Derivatives Ltd maintains a balance in the client trust account to meet its obligations such as client withdrawals etc. The remaining funds are forwarded to our counterparties and applied against your margin, fee and settlement obligations. It is important to note that holding your money in one or more segregated accounts with our counterparties may not afford you absolute protection.
Pacific Financial Derivatives Ltd enters into arrangements with third party counterparties for the facilitation of transactions and settlements, and uses money received for margin calls and settlements to such providers for this purpose. Accordingly clients are indirectly exposed to the financial risks of our counterparties and organisations with whom Pacific Financial Derivatives Ltd holds client funds. If the financial condition of Pacific Financial Derivatives Ltd or assets of our counterparties or the parties with which we hold client assets deteriorate, then clients could suffer loss because the return of the client capital could become difficult.
Client trades can only be placed when there are cleared funds in the client’s account. Accordingly, no scenario is anticipated which would result in a shortfall in the client trust account, and in the event that there was, Pacific Financial Derivatives Ltd would immediately deposit its own funds to meet this shortfall.
In accordance with Pacific Financial Derivatives Ltd’s Derivatives Issuers License Pacific Financial Derivatives Ltd fully hedges all contracts entered into by its clients. The hedging counterparties that Pacific Financial Derivatives Ltd hedges with are:
1. CFH Clearing Limited - https://www.cfhclearing.com/
2. Forex Capital Markets Ltd - https://www.fxcm.com/uk/
3. Squared Financial Services Ltd - https://squaredfinancial.com/
4. MB Trading Futures Inc. - http://www.mbtrading.com/
5. RJO Brien (UK) Ltd - https://www.rjobrien.com/
6. LMAX Limited - https://www.lmax.com/
7. Velocity Trade International - http://www.velocitytrade.com/
8. Advanced Markets LLC. - http://advancedmarketsfx.com/
9. TF Global Markets (Aus.) Pty Ltd t/a ThinkForex - http://www.thinkforex.com/
10. JFD Brokers Ltd-https://www.jfdbrokers.com/
11. Global Prime Pty Ltd-https://www.globalprime.com.au/
12. Invast Financial Services Pty Ltd-http://www.invast.com.au/