Last Update：Jul 21, 2023

Important Notes

Japanese stock price quotes are delayed by at least 20 minutes.
Some overseas stock exchanges operate with a market maker system, which may not be able to confirm the order execution until the market opens on the following trading day.
US persons and Canadian residents are not allowed to trade US and Canadian securities respectively.
Please take care when placing orders as market misconduct such as market manipulation and false trading are serious offences. Any error trades should be reported ASAP.
Information contained herein is based on sources that Phillip Securities (Hong Kong) Limited (“PSHK”) believed to be accurate. PSHK does not bear responsibility for any loss occasioned by reliance placed upon the contents hereof.
In providing Best Execution on US stock admitted to trading on US stock exchanges, we may, when considering the Execution Factors, decide to execute a client order to OTC Trading Venue.

Risk Disclosures

1. Risks of using electronic trading services

If you undertake transactions via electronic trading facilities, you will be exposed to risks associated with the system including the failure of hardware and software, and your order may not be executed according to your instructions.

2. Risks of Securities Trading

The prices of securities may fluctuate dramatically and become valueless. Losses may be incurred as a result of buying and selling securities.

3. Risks of Derivatives Trading

Trading of derivatives involves high risks and is not suitable for every investor. The prices of derivatives may fall as rapidly as they may rise and you may suffer total or excessive loss of your investment amount.

4. Risks of Margin Trading

The risk of loss in financing a transaction by deposit of collateral is significant. You may be called upon at short notice to deposit additional margin funds. In extreme market conditions we may be unable to contact you or provide you with sufficient time to make the required deposits, and forced liquidation may be necessary.

5. Risks Relating to Restriction on Foreign Ownership of Japanese Stocks

Japanese laws impose restrictions on foreign ownership of Japanese stocks in some industries (e.g. aviation, broadcasting, and telecommunications). Foreign investors may be permitted to acquire shares beyond stipulated limits, but would be denied registration as shareholders, and consequently may not have the right to vote and receive dividends. Details of foreign investor holding ratios are available at http://www.jasdec.com/en/reading_e/for_pubinfo.php.

6. Risks Relating to Restriction from buying and selling particular foreign securities or with limitations

Due to various reasons, some foreign securities may be restricted from buying or selling or imposed with some limitations at the discretion of us, brokers, custodians, exchanges, regulators, governmental agencies or agents and etc, without prior notice or disclosure of reasons. In general, the reasons may include but not limit to compliance control, difficulty in share settlement, potentially unusual tax impact, foreigners' share ownership close to or already over regulatory limit.

Example 1: In late May 2021, we were notified by our Thailand stock broker, that buy order on KBANK.TH (NVDR class of a Thailand listeco, KASIKORNBANK PLC) had been rejected by The Stock Exchange of Thailand since the NVDR class accounted 24.39% of paid-up capital, close to the regulatory limit 25%.

Example 2: In early Feb 2021, our US stock broker notified us it would reject sell order on GME (Gamestop - A class) if order price was USD3,000 or above in order to effectively monitor and manage its risk profiles. For your information, the stock price was very volatile in late Jan, rocketed more than 12 folds to USD483, day-high on 28 Jan 2021, then tumbled 75% to USD112.25 on the same day, then rebounded by 268% to USD413.98 on next trading date.

7. Risk Relating to Extended Hours Trading

a. Risk of Lower Liquidity
Liquidity refers to the ability of market participants to buy and sell securities. Generally, the more orders that are available in a market, the greater the liquidity. Liquidity is important because with greater liquidity it is easier for investors to buy or sell securities, and as a result, investors are more likely to pay or receive a competitive price for securities purchased or sold. There may be lower liquidity in extended hours trading as compared to regular trading hours. As a result, your order may only be partially executed, or not at all.

b. Risk of Higher Volatility
Volatility refers to the changes in price that securities undergo when trading. Generally, the higher the volatility of a security, the greater its price swings. There may be greater volatility in extended hours trading than in regular trading hours. As a result, your order may only be partially executed, or not at all, or you may receive an inferior price when engaging in extended hours trading than you would during regular trading hours.

c. Risk of Changing Prices
The prices of securities traded in extended hours trading may not reflect the prices either at the end of regular trading hours, or upon the opening the next morning. As a result, you may receive an inferior price when engaging in extended hours trading than you would during regular trading hours.

d.Risk of Unlinked Markets
Depending on the extended hours trading system or the time of day, the prices displayed on a particular extended hours trading system may not reflect the prices in other concurrently operating extended hours trading systems dealing in the same securities. Accordingly, you may receive an inferior price in one extended hours trading system than you would in another extended hours trading system.

e. Risk of News Announcements
Normally, issuers make news announcements that may affect the price of their securities after regular trading hours. Similarly, important financial information is frequently announced outside of regular trading hours. In extended hours trading, these announcements may occur during trading, and if combined with lower liquidity and higher volatility, may cause an exaggerated and unsustainable effect on the price of a security.

f.Risk of Wider Spreads
The spread refers to the difference in price between what you can buy a security for and what you can sell it for. Lower liquidity and higher volatility in extended hours trading may result in wider than normal spreads for a particular security.

Details of the Extended Hours Trading Risk Disclosure are available at FINRA’s website: https://www.finra.org/rules-guidance/rulebooks/finra-rules/2265

Risks and Disclaimers Relating to Holding, Sale or Transfer (with consideration) of US Public Traded Partnerships Securities or their derivatives (hereinafter referred to as “US PTP”)

US Inland Revenue Service (“US IRS”) has announced to implement new provision s1446(a) and (f) of IRC Section effective from 1 January 2023 (settlement date, Sunday). It will have significant impact on the interest of Non-US Resident (“Foreign Persons”) investors who hold, sell or transfer (with consideration) of US PTP. Unless exceptions apply, they shall be subject to the following withholding taxes:-

1) Sale or transfer (with consideration) - Subject to a 10% withholding tax on GROSS sale transaction amount. It will be put under “ForeignExp” item on daily statement. This item includes other expenses or costs.

2) Certain Distribution (e.g. coupon, dividend or interest) – An additional 10% withholding tax if the distribution is classified as Excess of Cumulative Net Income (“ECNI”). Actually, the Section 1446(a) has been implemented, the tax rates are 37% (individual) or 21% (corporate and institutional customers). Since our accounts with US stock broker(s)/custodian(s) commingle assets of individuals, companies and institutional customers, they have applied 37% across-the-board.

What are PTP securities?

US or non-US partnerships that are traded on securities markets or readily tradable on secondary market.
Commonly referred to as Master Limited Partnerships (or MLPs).
Though typically invests in natural resources (e.g. oil and gas) and real estate, but indeed includes widespread segments (e.g. currency / derivative-made /commodities-related ETFs).

Potential risks to customers include but not limit to:

US PTP taxable product list (for your reference only) is non-exhaustive and may change at any time without prior notice. US IRS tax codes are mainly principle-driven, any securities falling into the principles are regarded but there are exceptions. Moreover, any announcements, orders, rules or updates of US IRS or Department of the Treasury, qualified notices of US PTP themselves, corporate actions that alter issuer’s securities classification and etc will change the universe and taxable income. However, neither an authoritative nor industry-adopted list is available. We primarily rely on information provided by our major US stock broker(s)/custodian(s), with additional external sources. The update may not be active or regular. Therefore, its accuracy, correctness, completeness or timeliness of the list are not verified or guaranteed.
Reclassification, change or update of US PTPs, taxable income and/or exception after a transaction or settlement–If a securities or its income is subsequently classified as US PTP or taxable respectively, new/additional withholding tax amount is deducted from your account, customer has to settle in full and immediately. On the contrary, the adjustment is credited to your account. Several amendments are possible. Extra charges and costs (if any, e.g. interest, bank charges or operational costs) will completely fall on your shoulders. For financial intermediary customers, while you may act as an agent on behalf of your underlying clients, you are still liable to pay us any withholding tax in full and immediately.
Tax on GROSS sale proceed or consideration – For example, 1 share is bought at $100, then sold at $130, the gain is reduced by $13 tax to $17 from $30. On the contrary, if it is sold at $90, the loss would exacerbate by $9 tax to $19 from $10.

Disclaimers

Phillip Securities (Hong Kong) Limited and its Group’s affiliates/subsidiaries (hereinafter referred to as “The Group”) are not the specialist of US IRS’s tax codes. Please seek for independent advice from your US tax expert. Moreover, the Group is not liable to any loss or liabilities arising from the use of the information and/or holding, transacting or transfer of US PTPs. The Group will not notify any changes in the relevant laws and regulations on US PTP, but customers should pay attention to their own investment positions, the development of laws and regulations and understand their impact on their own rights. The Group reserves the rights to claim the withholding tax from you to satisfy IRS withholding requirements.
The Group relies tax information, classifications/reclassification, items, amounts, adjustments and etc completely on our US stock brokers/custodians. We or these parties will not provide any explanation or tax service.
Please read thoroughly the Sections of “Suitability” and “Tax compliance” in our SECURITIES CLIENT AGREEMENT:
http://www.poems.com.hk/media/153427/CashAgreement.pdf

To fully understand the impact and implication on your interest and liability, please be suggested to read thoroughly US IRS webpages, follow closely announcement and qualified notice of related US PTP issuers, announcement and updates by US IRS and US Department of The Treasury. US IRS web pages relating to US PTP:

https://www.irs.gov/individuals/international-taxpayers/publicly-traded-partnerships
https://www.irs.gov/individuals/international-taxpayers/rules-applicable-to-publicly-traded-partnerships
https://www.irs.gov/individuals/international-taxpayers/partnership-withholding

This brief statement cannot disclose all risks. You should therefore study carefully the risks disclosure statements on our website and in your client agreement.

Important Notes of Statement

Last updated on May 13, 2014

The above transaction(s) was/were conducted through the nominee account of Phillip Securities (Hong Kong) Limited (“PSHK”) with the respective executing broker(s) on the applicable Exchange or fund house.
Ref. No [*] denotes force trade. [#] denotes short selling order.
In case of error or omission in this statement, please notify PSHK within 3 days from the date of this statement. Otherwise, this statement shall be deemed correct.
PSHK or the executing broker(s) is authorized to collect the appropriate charges or levies in accordance with the rules prescribed by applicable Exchanges from time to time.
All Transactions shall be subject to the Client Agreement and, in respect of those Exchanges and/or Clearing Houses where the Transactions are processed, the constitution, rules, regulations, practices, procedures and administrative requirements, as amended from time to time, of the relevant Exchange and/or Clearing House and to all applicable laws whether imposed on the Customer or PSHK, as amended from time to time.
Transactions on markets in other jurisdictions may expose you to additional risks and Customer assets received or held by PSHK outside of Hong Kong may not enjoy the same level of protection as that conferred on assets received or held in Hong Kong. In particular, foreign securities trading is not regulated by the SEHK and will not be covered by the Investor Compensation Fund.
Please update your account information by logging into www.poems.com.hk or downloading the Account Particulars Amendment Form.
Client Agreement and Personal Information Collection Statement have been updated on http://www.poems.com.hk. Please contact our Customer Service at cs@phillip.com.hk or call 2277 6555 to stop receiving marketing information.
Canadian residents are not permitted to trade / hold Canadian securities.