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Global Payment and Risk Management Solutions

Product Disclosure Statement

Australia - June 2015

Associated Foreign Exchange Australia Pty Ltd.ABN: 85 119 392 586ACN: 119 392 586AFSL Number: 305246

Associated Foreign Exchange Australia Pty Ltd of 44Citigroup Centre, 2 Park Street, Suite D, 38th Floor, Sydney NSW 2000T +61 (02) 9268 7600 F +61 (02) 9268 7698 E [email protected] W afex.com

Table of Contents

Purpose . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Changes to this PDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

About Us . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Your Contract with AFEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

What Financial Products Do We Offer? . . . . . . . . . . . . . . . . . . . . . . . . 4

Spot Value Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Exotic Currency Spot Value Contracts. Value Today Contracts . . 5

Value Tomorrow Contracts, Window Forward Contracts . . . . . . . . 5

Outright Forward Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Exotic Currency Forward Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Vanilla Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Forward Extra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Participating Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Collar Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Knock-out Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Knock-out Forward Extra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Knock-out Ratio Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Knock-out Ratio Forward Extra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Ratio Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Ratio Forward Extra . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Foreign Exchange Option Partial or Full Pre-Delivery . . . . . . . . . . 35

Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Client Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Significant Benefits of Our Products . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Significant Risks of Our Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

How to Open an Account with AFEX . . . . . . . . . . . . . . . . . . . . . . . . . . 36

When Payment is Made . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Cost of Foreign Exchange Transactions . . . . . . . . . . . . . . . . . . . . . . . 39

Other Ways We Are Remunerated . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Confirmation of Foreign Exchange Transactions . . . . . . . . . . . . . . . 41

Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Disputes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

Privacy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42

Product Disclosure Statement June 2015


Purpose

The purpose of this Product Disclosure Statement (PDS) is to provide you with sufficient information to enable you to make an informed decision about whether to purchase a financial product from Associated Foreign Exchange Australia Pty Ltd (trading as Associated Foreign Exchange) (“AFEX”, “we”, “us”, “our”).

This PDS sets out the significant features of our financial products, including their risks, benefits, costs and other related information.

This PDS will:

• help you make meaningful comparisons with similar products;

• help you decide if the product meet your needs; and• explain the rights, terms, conditions, and obligations as it

relates to each product.

The PDS is an important document and we recommend that you read it carefully before purchasing the financial product, and then keep it in a safe place.

We also have a Financial Services Guide that gives you more information about us and the products and services we can offer you. Please contact us using the details on the cover page of this PDS to get a free copy of this document.

If you have any questions or need more information, please contact us using the details on the cover page of this PDS.

Warning:

Trading in foreign exchange and foreign exchange derivative products involves the potential for gain as well as the risk of loss. In some cases, that loss may exceed the amount of money you commit to a transaction. Movements in the price of foreign exchange rates are influenced by a variety of factors many of which are unpredictable. AFEX is unable to guarantee a maximum loss that you may suffer from trading. You must not use any products described in this PDS unless you have a comprehensive understanding how they work, including the risks and the costs involved.

Changes to this PDS

Information in this PDS that is not materially adverse to users of our products is subject to change and may be updated via our company website (see our contact details on the cover page of this PDS). You can access that information by visiting the website, or otherwise contacting us and asking for an electronic or paper copy, which will be provided free of charge. You can also access the website which may contain, from time to time, other information about our products. We may make other information about our products available to you, and that information may also be accessed for free from our website or by contacting us by phone or email.

About Us

Associated Foreign Exchange Australia Pty Ltd is a wholly owned subsidiary of Associated Foreign Exchange Holdings, Inc. headquartered in the United States of America. The business was established in 1979 to provide a better level of service to firms and individuals with a need for foreign exchange services.

Besides Australia and the United States, the group has presence in the United Kingdom, Switzerland, Italy and Canada. We have established trading relationships in over 40 countries and cultivated a diverse client base representing every industry.

AFEX is the issuer of all of the products described in this PDS. This PDS is available to the general public, and you can get copies of this PDS by contacting us using the details on the cover page of this PDS. You should consider this PDS before making a decision to acquire or continue to hold any of the products described in it.

If you become a client, you will be assigned an Account Executive. That person will be your primary contact point, and will help you use our services.



Your Contract with AFEX

When you acquire a product from us you are entering into a contract with AFEX in relation to the product. That contract is made up of:

• the relevant application form;• the description of the products in this PDS;• the terms and conditions provided to you (this is usually

part of the account application form, but may include extra documents); and

• any additional documents or correspondence relating to one or more contracts with us.

The application forms, our standard terms and conditions and any additional documents or correspon-dence relating to one or more contracts with us are separate documents to this PDS. The relevant ap-plication form for you will depend on whether you are using our services in your own capacity (a personal account application form) or on behalf of a business (a business account application form). The terms and conditions and description of fees and products within those documents forms part of this PDS. A copy of those forms is available upon your request, at no charge, by contacting us using the details on the cover page of this PDS.

To the extent of any inconsistency, the terms of this PDS prevail over any other terms and conditions.

None of our products have a cooling off period.

What Financial Products do we offer?

AFEX offers the following products that help you transfer currency, exchange currency, and manage currency risks:

Foreign Exchange Products:

• Spot Value Contracts (page 4)• Exotic Currency Spot Value Contracts (page 5)

Foreign Exchange Derivative Products:

• Value Today Contracts (page 5)• Value Tomorrow Contracts (page 5)• Window Forward Contracts (page 5)• Outright Forward Contracts (page 6)• Exotic Currency Forward Contracts (page 6)

Foreign Exchange Option Contracts:

• Vanilla (page 6)• Forward Extra (page 9)• Participating Forward (page 12)• Collar Option (page 15)• Knock-Out Forward (page 18)• Knock-Out Forward Extra (page 20)• Knock-Out Ratio Forward (page 23)• Knock-Out Ratio Forward Extra (page 26)• Ratio Forward (page 29)• Ratio Forward Extra (page 32)

Each of the above products is explained in this PDS. You should refer to the glossary at the end of this PDS for an explanation of specific terms. The examples in this PDS are for illustrative purposes only, and do not reflect actual market conditions.

Spot Value Contracts

Spot Value Contracts exchange one currency for another at a specified and agreed Foreign Exchange Rate (the Spot Exchange Rate) two Business Days after the Trade Date (Spot Value Date).

Spot Value Contract Example

You are an Australian based importer and need to pay for goods valued USD 100,000 in two days and will pay for these USDs using AUDs.

AFEX quotes you a spot exchange rate (the contract rate) of 0.8500. Acceptance of this quote will create the Spot Value Contract between you and AFEX.

The AUD equivalent is USD 100,000 ÷ AUDUSD 0.8500 = AUD 117,647.06.

Before 3pm AEST/AEDT of the Spot Value Date, you will send AFEX the AUD to settle your contract so that AFEX can deliver the USD on the Spot Value Date.

By entering into a Spot Value Contract you have removed the uncertainty of exchange rate movements over the next two Business Days. In exchange for this exchange rate certainty you have lost the opportunity to take advantage of any favourable exchange rate movements between the Trade Date and the Spot Value Date.



Exotic Currency Spot Value Contracts

If you intend to purchase an Exotic Currency, (and you will be informed at the time of booking by your Account Executive whether the currency you are buying is an Exotic Currency) you are only allowed to book for delivery on the Spot Value Date and need to make payment for this purchase on or before 3pm AEST/AEDT of the Trade Date. Failure to do so may result in the Exotic Currency you had purchased being sold back and the resulting loss (if any) being charged to you.

It is your responsibility to provide correct and complete bank instructions prior to the trade. The trade may take place only upon approval of the bank instructions by AFEX.

By entering into an Exotic Currency Spot Value Contract you have removed the uncertainty of exchange rate movements over the next two Business Days. In exchange for this exchange rate certainty you have lost the opportunity to take advantage of any favourable exchange rate movements between the Trade Date and the Spot Value Date.

In addition to this Exotic Currencies are illiquid, i.e. they have low trading volumes and therefore market movements in these environments can be amplified and unpredictable. This increased level of risk represents a high cost to carry for trading entities and complicates the unwinding of existing currency positions.

The differences between the bid and ask prices for exotic currencies tend to be significantly wider compared to the major currencies. This combination of illiquidity and a lack of inherent price stability have an adverse effect on exotic currency pricing. In turn, this heightens volatility, which poses a significant risk to any trading entity. Market volatility can be higher by a margin of several hundred percent, depending on socioeconomic and political conditions or the prevalent investment climate in the respective jurisdiction. If a transaction has to be sold back to the currency market, the probability for substantial losses is significantly increased.

Value Today Contracts

Value Today Contracts exchange one currency for another at a specified and agreed Foreign Exchange Rate for a Value Date the same day as the Trade Date. They are not available for Exotic Currencies.

By entering into a Value Today Contract you have removed the uncertainty of exchange rate movements for the day. In exchange for this exchange rate certainty you have lost the

opportunity to take advantage of any favourable exchange rate movements from the time you have had your contract executed.

The exchange rates quoted for Value Dates different from the Spot Value Contract are determined by adjusting the Spot Exchange Rate by Forward Points.

Value Tomorrow Contracts

Value Tomorrow Contracts exchange one currency for another at a specified and agreed Foreign Exchange Rate for a Value Date one Business Day after the Trade Date. They are not available for Exotic Currencies.


By entering into a Value Tomorrow Contract you have removed the uncertainty of exchange rate movements over the next Business Day. In exchange for this exchange rate certainty you have lost the opportunity to take advantage of any favourable exchange rate movements between the Trade Date and the Value Date.

Window Forward Contracts

Window Forward Contracts exchange one currency for another at a specified and agreed Foreign Exchange Rate for a Value Date between three Business Days and one year after the Trade Date and allow you to access your foreign currency at any time within the Window Period.


By entering into a Window Forward Contract you have removed the uncertainty of exchange rate movements until the settlement of the contract . In exchange for this exchange rate certainty you have lost the opportunity to take advantage of any favourable exchange rate movements between the Trade Date and the Value Date. In addition, with a Window Forward Contract, you may utilize any portion of the currency purchased at any time up to the Value Date of the contract, once that currency has been paid for.



Outright Forward Contracts

Outright Forward Contracts exchange one currency for another at a specified and agreed Foreign Exchange Rate for a Value Date between three Business Days and one year after the Trade Date and have a fixed future date as the Value Date.

The exchange rates quoted for settlement dates different from the spot value contract are determined by adjusting the Spot Exchange Rate by Forward Points.

By entering into an Outright Forward Contract you have removed the uncertainty of exchange rate movements over the next Business Days. In exchange for this exchange rate certainty you have lost the opportunity to take advantage of any favourable exchange rate movements between the Trade Date and the Value Date.

Outright and Window Forward Contract Example

You are an Australian based importer and need to pay for goods valued USD 100,000 in 3 months and will pay for these USDs using AUDs.

AFEX quotes you a forward exchange rate (the contract rate) of 0.8200, which in this case is made up of a spot exchange rate less forward points. Acceptance of this quote will create the Forward Contract between you and AFEX.

The AUD equivalent is USD 100,000 ÷ AUDUSD 0.8200 = AUD 121,951.22.

Before the value date of the contract, you will send AFEX the AUDs to settle your contract so that AFEX can deliver the USDs on the final date of the contract.

By entering into a forward contract you have removed the uncertainty of exchange rate movements over the term of the forward contract. In exchange for this exchange rate certainty you have lost the opportunity to take advantage of any favourable exchange rate movements.

As mentioned, in an Outright Forward Contract you can only make use of the foreign currency on the Value Date. In a Window Forward Contract you can make use of the foreign currency throughout the Window Period and must be fully paid for by the Value Date.

Exotic Currency Forward Contracts

If you intend to purchase an Exotic Currency for a value date later than the Spot Value Date, (and you will be informed the time of booking by your Account Executive whether the currency you are buying is an Exotic Currency) you will be entering into an Exotic Currency Forward Contract.

It is your responsibility to provide correct and complete bank instructions prior to the trade. The trade may take place only upon approval of the bank instructions by AFEX. Following approval the trade will take the form of an Outright Forward Contract.

In addition to the risks and benefits of the applicable type of Forward Contract, Exotic Currencies are illiquid, i.e. they have low trading volumes and therefore market movements in these environments can be amplified and unpredictable. This increased level of risk represents a high cost to carry for trading entities and complicates the unwinding of existing currency positions.

The differences between the bid and ask prices for exotic currencies tend to be significantly wider compared to the major currencies. This combination of illiquidity and a lack of inherent price stability has an adverse effect on exotic currency pricing. In turn, this heightens volatility, which poses a significant risk to any trading entity. Market volatility can be higher by a margin of several hundred percent, depending on socio-economic and political conditions or the prevalent investment climate in the respective jurisdiction. If a transaction has to be sold back to the currency market, the probability for substantial losses is significantly increased.

Vanilla Option

A Vanilla Option is a type of Foreign Exchange Option Contract. When you buy a Vanilla Option you obtain an agreement that gives you the right but not the obligation to enter into a Spot Value Contract Transaction at a pre-determined Foreign Exchange Rate on a pre-determined date in the future. You will have to pay a non-refundable fee (Premium) for the Vanilla Option, but you will not have to settle the transaction if you choose not to exercise the Vanilla Option.

A Vanilla Option gives you the right but not the obligation to:• Buy one currency at a pre-determined price within a pre-

determined time frame (Call Option); or• Sell one currency at a pre-determined price within a pre-

determined time frame (Put Option).


Scenario A

Strategy Details – AUDUSD Vanilla Option

Currency Pair AUDUSD

Notional Amount USD 1,000,000

Worst Case Rate 1.0600

Strike Rate 1.0600

Expiry Date 01-June-2012

Expiry Time 03:00PM Tokyo

Delivery Date 05-June-2012

Premium AUD 21,700.00

Buyer You

Seller AFEX


We adopt the Tokyo cut-off time which starts and finishes at 3 P.M. in Tokyo (UTC/GMT +9), unless we state otherwise for the Vanilla Option.

Put Option Example: You will have to pay USD 1,000,000 on 05/06/12, and you wish to sell AUD to obtain the USD . You want to ensure a minimum Foreign Exchange Rate of 1.0600, but you would like to profit if the Spot Rate were to move higher than 1.0600. This option gives you the right to sell AUDUSD at 1.0600.

Example Strategy: Buying a Vanilla Put Option gives you the right, but not the obligation to sell a pre-determined amount of currency, at a pre-determined price within a pre-determined time frame. This is a hedging strategy, which, for a small cost, can protect you from an adverse movement in the Spot Rate, and allow you to get a better rate than the current Forward Rate if the Spot Rate moves in your favour.

There are two possible outcomes at the Expiry Time:

Scenario A: The AUDUSD Spot Rate is above 1.0600. You choose to let the Vanilla Put Option lapse, dealing in the spot market at a more favourable Spot Rate than 1.0600.

Scenario B: The AUDUSD Spot Rate is below 1.0600. You choose to exercise the Vanilla Put Option and buy USD 1,000,000 at the Worst Case Rate of 1.0600.

Payoff: If the Spot Rate is below 1.0600 at the Expiry Time, this Vanilla Put Option is in-the-money, and allows you to sell AUDUSD at 1.0600 (the Worst Case Rate). If AUDUSD increases above 1.0600, the Put Option expires worthless and you would sell at the market Spot Rate (which is a better rate). Your maximum gain is unlimited.

Payoff Profile: The Strike Rate 1.0600 specifies a Worst Case Rate. This means that you will receive at least 1.0600 no matter how low the AUDUSD Spot Rate is at the Expiry Time. However, if the Spot Rate is above 1.0600 at the Expiry Time, you would sell AUD and buy USD at the prevailing market Spot Rate. The higher the Spot Rate goes the more profit you will make, as compared to your Worst Case Rate. For a more favourable Worst Case Rate (i.e. a higher Strike Rate), you would pay a higher Premium. Please note that as you make the Worst Case Rate more favourable, you sacrifice some of the profit you would make if the Spot Rate at the Expiry Time was above the original Worst Case Rate.


Scenario B




Strike Rate 1.0600




Premium USD 28,139.77

Buyer You

Seller AFEX


Call Option Example: You will have to pay USD 1,000,000 on 05/06/12, and you wish to sell USD to obtain the AUD. You want to ensure a minimum rate of 1.0600, but you would like to profit if the Spot Rate were to move lower than 1.0600. This option gives you the right to sell USD buy AUD at 1.0600.

Example Strategy: Buying a Vanilla Call Option gives you the right, but not the obligation to buy a pre-determined amount of currency, at a pre-determined price within a pre-determined time frame. This is a hedging strategy, which, for a small cost, can protect you from an adverse movement in the Spot Rate, and allow you to get a better rate than the current Forward Rate if the Spot Rate moves in your favour.

There are two possible outcomes at the Expiry Time:

Scenario A: The AUDUSD Spot Rate is below 1.0600. You choose not to exercise the Vanilla Option; dealing in the spot market at a more favourable Spot Rate than 1.0600

Scenario B: The AUDUSD Spot Rate is above 1.0600. You choose to exercise the Vanilla Option and buy AUD 1,000,000 at the Worst Case Rate of 1.0600

Payoff: If the Spot Rate is above 1.0600 at the Expiry Time, this Vanilla Put Option is in-the-money, and allows you to sell USD buy AUD at 1.0600 (the Worst Case Rate). If AUDUSD is under 1.0600, the Call Option expires worthless and you would buy at the market Spot Rate (which is a better rate). Your maximum gain is unlimited.

Payoff profile - Worst Case Rate: The Strike Rate 1.0600 specifies a Worst Case Rate. This means that you will receive at least 1.0600 no matter how high the AUDUSD Spot Rate is at the Expiry Time. However, if the Spot Rate is below 1.0600 at the Expiry Time, you would BUY at the market Spot Rate. The lower the Spot Rate goes the more profit you will make, as compared to your Worst Case Rate. For a more favourable Worst Case Rate (i.e. a lower Strike Rate), you would pay a higher premium. Please note that as you make the Worst Case Rate more favourable, you sacrifice some of the profit you would make if the Spot Rate at the Expiry Time was above the original Worst Case Rate.


Strategy Details – AUDUSD Vanilla Option

Scenario A

Scenario B


Significant Benefits: The Significant Benefits of using a Vanilla Option are:

• They allow you to protect yourself from an unfavourable movement in the Foreign Exchange Rate, but allow you to simply trade at the Spot Rate if the Spot Rate is more favourable when the time comes for you to conduct the transaction.

• In the example above, the Call strategy allows you to protect the risk of buying currency at a rate that is less favourable than your Worst Case Rate of 1.0600, and it allows unlimited partici pation in a favourable move of AUDUSD moving lower than 1.0600.

• You can define a “worst case” exchange rate.• The upfront financial cost is limited to the cost of the

Premium.• See page 36 of this PDS for other benefits.

Significant Risks: The Significant Risks of using a Vanilla Option are:

• You need to pay for a Vanilla Option with a premium, which is non-refundable. It is not a zero cost structure.

• Depending on prevailing market rates, the total cost of the Vanilla Option, including the Premium plus the ultimate Foreign Exchange Rate, might be higher than if you had not purchased a Vanilla Option.

• At the Expiry Time or upon cancellation of the Vanilla Option, movements in market exchange rates plus the passage of time may result in the Vanilla Option having a reduced value or even no value.

• If you need to cancel the Vanilla Option, you may incur fees. See the section titled “Cancellation” on page 35 for more information, including information about how any loss is calculated.

• See page 36 of this PDS for other risks.

Forward Extra

A Forward Extra is a type of Structured Option which provides a guaranteed Worst Case Rate and also allows you to fully participate in favourable exchange rate movements, provided the Foreign Exchange Rate has not breached a pre-specified rate (Barrier Level). If the Barrier Level has been breached during the pre-specified Barrier Period, you will be obliged to trade the full notional amount of the contract at the Worst Case Rate, regardless of where the Spot Rate is at the Expiry Time.

Example for Exporter: You will have to pay a liability of AUD 1,000,000 on 22/08/12, so, you will need to sell USD and buy AUD to get the AUD to cover it. You believe that, by 22/08/12, AUDUSD will be near to, but no lower than 0.9600 and would like to benefit if that happens. Otherwise you want to ensure a maximum rate of 1.0600. This strategy gives you the right to sell USD and buy AUD at 1.0600, and if spot is in be¬tween 1.0600 and 0.9600 you will profit from the lower rate. Provided of course the Barrier Level has not been breached.

Recommended Strategy: This is a hedging strategy that can lock in a Worst Case Rate, while allowing you to profit against the Worst Case Rate if the Spot Rate ends up close to the Barrier Level, but still in between the Barrier Level and the Strike Rate. If AUDUSD breaches the Barrier Level of 0.9600, the Worst Case Rate is locked in and you must transact at that rate, regardless of the AUDUSD.


There are three potential outcomes at expiry:

Scenario A: If the AUD/USD spot rate has traded at or below the barrier level of 0.9600 at any point during the life of the contract, you are obliged to sell USD and buy AUD 1,000,000 at the budget level of 1.0600, regardless of where the exchange rate is on the expiry date.

Scenario B: If the AUD/USD spot rate is below 1.0600 and has not traded at or below the barrier level of 0.9600 at any point, you have the right but not the obligation to sell USD and buy AUD 1,000,000 at the prevailing spot rate.

Strategy Details - AUDUSD Forward Extra


Notional Amount AUD 1,000,000Worst Case Rate 1.0600

Strike Rate 1.0600

Barrier Level 0.9600

Barrier Period Start Date 22-Aug-2012

Barrier Period End Date 22-Nov-2012

Expiry Date 22-Nov-2012

Delivery Date 26-Nov-2012

Expiry Time 03.00 PM Tokyo

Premium Zero Cost

Buyer You

Seller AFEX


Scenario C: If the AUD/USD spot rate is above 1.0600, you have the right, but not the obligation, to sell USD and buy AUD 1,000,000 at 1.0600.

Payoff: This Forward Extra ensures that you receive no more than 1.0600(the budget/protection rate). If AUD/USD is in between 1.0600 and 0.9600 at expiry but hasn’t touched 0.9600 during the life of the contract, you have no obligation and can choose to trade in the market at the prevailing spot rate, otherwise you receive 1.0600.

Payoff Profile - Budget Rate:The strike rate, 1.0600, specifies a budget rate. You will receive no more than this rate to sell your USD.

Disadvantages:• The budget rate for a zero cost forward extra is worse than

the current forward rate.• Your participation in profit from a favourable move of

AUD/USD is limited to a rate of 0.9601.

Advantages:• Can be used to establish a budget rate of strike for selling

USD, buying AUD 1,000,000.• Can be structured at zero cost.• Allows a profit vs. the budget rate if spot ends up in

between 1.0600 and 0.9600 at expiry but hasn’t touched the barrier level during the life of the trade.


Scenario A

Scenario B

Scenario C

Currency Pair AUDUSDNotional Amount USD 1,000,000Worst Case Rate 1.05

Strike Rate 1.05Barrier Level 1.1050

Barrier Start Date 01-Mar-2012Barrier End Date 05-June-2012

Expiry Date 01-June-2012Delivery Date 05-June-2012

Expiry Time 03:00 PM TokyoPremium 0 USD

Trade Time Available upon requestBuyer YouSeller AFEX


Example for Importer: You will have to pay a liability of USD 1,000,000 on 05/06/12, so, you will need to sell AUD and buy USD to get the USD to cover it. You believe that, by 05/06/12, AUDUSD will be near to, but no higher than 1.1050 and would like to benefit if that happens. Otherwise you want to ensure a minimum rate of 1.0500. This strategy gives you the right to sell AUD and buy USD at 1.0500, and if spot is in between 1.0500 and 1.1050 you will profit from the higher rate. Provided of course the Barrier Level has not been breached.

Example Strategy: This is a hedging strategy that can lock in a Worst Case Rate, while allowing you to profit against the Worst Case Rate if the Spot Rate ends up close to the Barrier Level, but still in between the Barrier Level and the Strike Rate. If AUDUSD breaches the Barrier Level of 1.1050, the Worst Case Rate is locked in and you must transact at that rate, regardless of the AUDUSD Spot Rate at Expiry Time.


There are three potential outcomes at Expiry Time:

Scenario A: If the AUDUSD Spot Rate has traded at or above the Barrier Level of 1.1050 at any point since the contract was entered into, you are obliged to sell AUD and buy USD 1,000,000 at the Worst Case Rate of 1.05, regardless of where the Spot Rate is at Expiry Time.

Scenario B: If the AUDUSD Spot Rate is above 1.05 and has not traded at or above the Barrier Level of 1.1050 at any point, you can sell AUD and USD 1,000,000 at the prevailing Spot Rate.

Scenario A

Scenario B

Scenario C

Strategy Details - AUDUSD Forward Extra



Obliged Amount to Deal USD 500,000

Protection Rate 1.0200

Strike Rate 1.0200




Premium Zero Cost

Buyer YOU

Seller AFEX


Scenario C: If the AUDUSD Spot Rate is below 1.05, you have the right, but not the obligation, to sell AUD and buy USD 1,000,000 at 1.05.

Payoff: This Forward Extra ensures that you receive no less than 1.05 (the Worst Case Rate). If AUDUSD is between 1.05 and 1.1050 at expiry but hasn’t breached 1.1050 during the life of the trade, you can trade at the Spot Rate, otherwise you trade at 1.0500.

Payoff Profile: The Strike Rate of 1.05 specifies a Worst Case Rate. You will receive no less than this rate for your AUDUSD when using a Forward Extra Option with the above example.

Significant Benefits: The Significant Benefits of a Forward Extra are:

• It can be used to establish a Worst Case Rate for selling currency.

• It can be structured at zero cost, so no Premium is payable.• It allows you to benefit against the Worst Case Rate if the

Spot Rate ends up in between 1.05 and 1.1050 at expiry but hasn’t touched the Barrier Level during the life of the trade.

• See page 36 of this PDS for other benefits.

Significant Risks: The Significant Risks of a Forward Extra are:

• The Worst Case Rate for a zero cost Forward Extra is worse than the Forward Rate.

• You will be prevented from enjoying some of the benefit of favourable movements in Foreign Exchange Rates if the rate breaches the Barrier Level.

• If you need to cancel the Forward Extra Option, you may incur fees. See the section titled “Cancellation” on page 35 for more information, including information about how any loss is calculated.

• If your Forward Extra Option moves out of the money beyond a predetermined percentage (which would be agreed with you prior to entering a contract – for example, 10 per cent) of the contract amount, we may seek from you an Additional Partial Prepayment as an offset to bring your Option’s risk exposure back to zero. See page 37 for more detail.


Participating Forward

A Participating Forward is a type of Structured Option which allows you to set a Worst Case Rate. It also gives you an opportunity to benefit if the Foreign Exchange Rate moves in your favour than the Worst Case Rate, by giving you the option to trade a pre-agreed percentage of your contract value at the higher and more favourable Spot Rate. That way you are “participating” in the prevailing market rate but are hedging all of the contract value in the event that the Foreign Exchange Rate moves in an adverse direction.

Example for Exporter: You will have to pay a liability of AUD on 05/06/12, so you will need to sell USD 1,000,000 and buy AUD to cover it. You want to ensure a minimum rate of 1.0200 for the full amount of the contract, but you still want to benefit if spot moves lower than 1.0200. This strategy gives you the right to sell USD at 1.0200, and if spot is lower than 1.0200 you will participate in a proportion of the notional amount at the prevailing rate.

Recommended Strategy: This is a hedging strategy which can protect you from an adverse movement in the Spot Rate, yet still allow you to get a better rate than the current Forward Rate. You can choose the level of participation that you want to have i.e. you can choose to cover 100% of your liability at 1.02, but participate in 50% of any upward movement.


Strategy Details - AUDUSD Participating Forward Option(Exporter)


There are two potential outcomes at expiry:

Scenario A: The AUDUSD Spot Rate is below 1.0200. You are obligated to buy USD 500,000 at the worst case rate of 1.0200. However, the remaining USD 500,000 can be bought in the Spot Market at the prevailing Spot Rate. The company has partially participated in a favourable exchange rate move.

Scenario B: The AUDUSD Spot Rate is above 1.0200. The Participating Forward Option provides a Worst Case Rate of 1.0200. You have full protection to buy USD 1,000,000 at a rate of 1.0200

Payoff: This Participating Forward ensures that you receive a rate no higher than 1.0200 (the budget/protection rate). If AUDUSD is below strike at expiry, you will buy USD at 1.0200 for USD 500,000 and are free to trade at the spot rate for the remaining amount.

Your maximum gain is unlimited.

Payoff Profile - Budget Rate: The strike rate, 1.0200, specifies a budget rate. You will not receive a rate higher than this rate for your AUDUSD exposure.

Disadvantages:• The budget rate for a zero cost participating forward is

worse than the current forward rate.• Your participation in profit from a favourable move of

1.0200 is limited to 50%.

Advantages:• Can be used to establish a budget rate of strike for selling

AUDUSD.• Can be structured at zero cost.• Allows limited participation in a favourable move of

AUDUSD moving lower than 1.0200.

Example for Importer: You will have to pay a liability of USD 1,000,000 on 05/06/12, so you will need to sell AUD and buy USD to cover it. You want to ensure a minimum rate of 1.0200 for the full amount of the contract, but you still want to benefit if spot moves higher than 1.0200. This strategy gives you the right to sell AUD at 1.0200, and if spot is higher than 1.0200 you will participate in a proportion of the notional amount at the prevailing rate.

Example Strategy: This is a hedging strategy which can protect you from an adverse movement in the Spot Rate, yet


Scenario A

Scenario B

Scenario C



Obliged Amount to Deal USD 500,000

Protection Rate 1.0200

Strike Rate 1.0200




Premium Zero Cost

Buyer YOU

Seller AFEX


still allow you to get a better rate than the current Forward Rate. You can choose the level of participation that you want to have i.e. you can choose to cover 100% of your liability at 1.02, but participate in 50% of any upward movement.

There are two possible outcomes at Expiry Time:

Scenario A: The AUDUSD Spot Rate is below 1.0200. The Participating Forward Option provides a Worst Case Rate of 1.0200. You have full protection to buy USD 1,000,000 at a rate of 1.0200.

Scenario B: The AUDUSD Spot Rate is above 1.0200. You are obligated to buy USD 500,000 at the worst case rate of 1.0200. However, the remaining USD 500,000 can be bought in the Spot Market at the prevailing Spot Rate. The company has partially participated in a favourable exchange rate move.

Payoff: This Participating Forward Option ensures that you pay no less than 1.0200 (the Worst Case Rate). If AUDUSD is above strike at expiry, you will pay 1.0200 for USD 500,000 and the Spot Rate for USD 500,000. Your maximum gain is unlimited.

Payoff Profile: The Worst Case Rate is 1.0200. You will not receive less than this rate.

Significant Benefits: The Significant Benefits associated with Participating Forward Options are:

• They can be used to establish a Worst Case Rate which allows you to hedge your exposure.

• The can be structured so that no Premium is payable (they are zero cost).

• They allow limited participation in a favourable move of the Foreign Exchange Rate (in the example above, the favourable movement was AUDUSD moving higher than 1.0200).


Significant Risks: The Significant Risks associated with Participating Forward Options are:

• The Worst Case Rate for a zero cost Participating Forward Option is worse than the current Forward Rate.

• Your benefit from a favourable move of AUDUSD is limited to 50%.

• If your Participating Forward Option moves out of the money beyond a predetermined percentage (which would be agreed with you prior to entering a contract – for

example, 10%) of the contract amount we may seek from you an Additional Partial Prepayment as an offset to bring your Option’s risk exposure back to zero. See the section titled “Cancellation” on page 35 for more information, including information about how any loss is calculated.



Scenario A

Scenario B

Strategy Details – Collar Option (Exporter)


Collar Option

The Collar Option is a type of Structured Option which allows you to protect against the risk that the Spot Rate will be less favourable than a nominated Worst Case Rate. It also gives you the ability to participate in favourable movements in the Spot Market between your Worst Case Rate and a Best Case Rate.

Example for Exporter: You have to pay a liability of AUD 1,000,000 on 05/06/12; therefore you will need to sell USD to convert it into AUD. You want to ensure a minimum rate of 1.0500, but you would like to profit if the Spot Rate were to move higher than 1.0500. You are willing to limit your potential to profit from a favourable market movement, in order to decrease the cost of the structure. This strategy gives you the right to buy AUDUSD at 1.0500 or better, but no better than 1.0000.

Recommended Strategy: The strategy provides the opportunity for limited profit, with the possibility of limited loss.

Scenario A: If the AUDUSD Spot Rate is above 1.0500, you have the right, but not the obligation, to sell USD and buy AUD 1,000,000 at the Worst Case Rate (described in the diagram as “Barrier”) of 1.0500.

Scenario B: If the AUDUSD Spot Rate is below the Best Case Rate (described in the diagram as “Strike”) of 1.0000 at expiry, you are obliged to sell USD and buy AUD 1,000,000 at the Best Case Rate of 1.0000.

Scenario C: If the AUDUSD Spot Rate is between 1.0000 and 1.0500, you have the right, but not the obligation, to sell USD and buy AUD 1,000,000 at the prevailing Spot Rate.

Payoff: This Collar Option ensures that you receive no more than 1.0500 (the budget rate). You will receive a more favorable rate if, at expiry, AUDUSD is below 1.0500, but with a capped participation rate of 1.0000.

Significant Benefits: The Significant Benefits associated with Collar Options are:


• They can be structured so that no Premium is payable (they are zero cost).

• They allow limited participation in a favourable move (in the above example, the favourable move was AUDUSD


Scenario A

Scenario B

Currency Pair: AUDUSDNational Amount: AUD 1,000,000

Worst Case Rate 1.0500Strike Rate 1.0500

Best Case Rate 1.0000Expiry Date 03-June-2012

Delivery Date 05-June-2012Expiry Time 03:00PM Tokyo

Delivery Date 05-June-2012Premium Zero Cost




Strike Rate 1.03

Best Case Rate 1.06

Expiry date 01-June-2012


Expiry Time 03:00 PM Tokyo

Premium Zero Cost

Buyer You

Seller AFEX


moving lower than 1.0500).• See page 36 of this PDS for other benefits.

Significant Risks: The Significant Risks associated with Collar Options are:

• The Worst Case Rate is lower than the current Forward Rate so it is possible that the payoff of this Collar Option at Expiry Time is worse than the payoff would have been, if you had purchased a Forward Contract at the current market value.

• Your participation in profit from a favourable move of AUDUSD is limited to the Best Case Rate.

• If your Collar Option moves out of the money beyond a predetermined percentage (which would be agreed with you prior to entering a contract – for example, 10%) of the contract amount we may seek from you an Additional Partial Prepayment as an offset to bring your Option’s risk exposure back to zero.

• If for any reason you want to cancel the Collar Option, you may incur cancellation costs. See the section titled “Cancellation” on page 35 for more information, including information about how any loss is calculated.


Example for Importer: You have to pay a liability of USD 1,000,000 on 05/06/12; therefore you will need to sell AUD to convert it into USD. You want to ensure a minimum rate of 1.03, but you would like to profit if the Spot Rate were to move higher than 1.03. You are willing to limit your potential to profit from a favourable market movement, in order to decrease the cost of the structure. This strategy gives you the right to sell AUDUSD at 1.03 or better, but no better than 1.06.

Example Recommended Strategy: The strategy provides the opportunity for limited profit, with the possibility of limited loss.


Scenario A: If the AUDUSD Spot Rate is above the Best Case Rate (described in the diagram as “Strike” ) of 1.06 at expiry, you are obliged to sell AUD and buy USD 1,000,000 at the Best Case Rate of 1.06.

Scenario B: If the AUDUSD Spot Rate is below 1.03, you have the right, but not the obligation, to sell AUD and buy USD 1,000,000 at the Worst Case Rate (described in the diagram as “Barrier”) of 1.03.


Scenario C

Strategy Details - AUDUSD Collar


Scenario C: If the AUDUSD Spot Rate is between 1.03 and 1.06, you have the right, but not the obligation, to sell AUD and buy USD 1,000,000 at the prevailing Spot Rate.

Payoff: Collar Option ensures that you receive no less than 1.03 (the Worst Case Rate). You will receive a more favourable rate if, at expiry, AUDUSD is above 1.03, but with a maximum of 1.0600. If the Spot Rate at expiry is above 1.06, you are obliged to take the rate of 1.06.

Significant Benefits: The Significant Benefits associated with Collar Options are:


• They can be structured so that no Premium is payable (they are zero cost).

• They allow limited participation in a favourable move (in the above example, the favourable move was AUDUSD moving higher than 1.03).


Significant Risks: The Significant Risks associated with Collar Options are:

• The Worst Case Rate is lower than the current Forward Rate so it is possible that the payoff of this Collar Option at Expiry Time is worse than the payoff would have been, if you had purchased a Forward Contract at the current market value.

• Your participation in profit from a favourable move of AUDUSD is limited to the Best Case Rate .

• If your Collar Option moves out of the money beyond a predetermined percentage (which would be agreed with you prior to entering a contract – for example, 10%) of the contract amount we may seek from you an Additional Partial Prepayment Margin Amount as an offset to bring your Option’s risk exposure back to zero.

• If for any reason you want to cancel the Collar Option, you may incur cancellation costs. See the section titled “Cancellation” on page 35 for more information, including information about how any loss is calculated.



Scenario A

Scenario B

Scenario C


Knock-Out Forward

A Knock-Out Forward is a type of Structured Option which provides a known Strike Rate for future exchange requirements which is better than the prevailing Forward Rate. However, if the Spot Rate breaches a pre-determined Knock-Out Level at any time during the Knock-Out Period, the trade ceases to exist and there are no obligations on either party.

If the Knock-Out Level is not breached during the Knock-Out Period then you will be obliged to exchange the full Notional Amount at the pre-agreed Strike Rate.

Example for Exporter: You have ongoing exposure to currency fluctuations and need to sell USD. You acknowledge that AUDUSD may depreciate in your favour and would like to benefit from it if it happens. You are not comfortable booking at the prevailing Forward Rate. This strategy gives you the right to buy AUD and sell USD at 1.0000 and if the Spot Rate moves above 1.0000 you will profit from the lower rate, providing the Knock-Out Level has not been breached during the Knock-Out Period. If the Spot Rate breaches the Knock-Out Level at any point during the Knock-Out Period you will be left un-hedged and may wish to sell USD in the Spot Market.

Example Strategy: The strategy provides an improved Strike Rate to the outright Forward Rate. If at any point during the Knock-Out Period the Spot Rate breaches the Knock-Out Level you will be left un-hedged and may decide to transact in the Spot Market.

There are two possible outcomes at Expiry Time:

Scenario A: If the AUDUSD Spot Rate has traded at or above the Knock-Out Level of 1.0800 at any point during the Knock-Out Period, you will be left un-hedged and may wish to trade in the Spot Market, which is likely to be considerably higher than 1.0000.

Scenario B: If the AUDUSD Spot Rate has not breached the Knock-Out Level of 1.0800 at any point during the Knock-Out Period, you have the obligation to buy AUD and sell USD at 1.0000 at expiry.

Payoff: This Knock-Out Forward offers a Strike Rate lower than the current Forward Rate, if the Knock-Out Level is not breached during the Knock-Out Period, in which case you will be buying AUD at 1.0000, which is a rate that was not achievable at the time you booked the contract.


Strategy Details - AUDUSD Knock-Out Forward (Exporter)

Currency Pair:

AUDUSD

Notional Amount: AUD 100,000 Strike Rate: 1.0000

Knock-Out Level: 0.800Knock-Out Period start

date:22-June-2012

Knock-Out Period end date:

24-Sept-2012Expiry Date: 24-Sept-2012

Delivery Date: 26-Sept-2012Expiry Time: 3.00 p.m. Tokyo time

Premium: Zero CostBuyer: You

Seller: AFEXScenario A

Scenario B

Currency Pair:

AUDUSD

Notional Amount: USD 100,000 Strike Rate: 1.0000

Knock-Out Level: 0.9000Knock-Out Period start date: 22-June-2012

Knock-Out Period end date: 24-Sept-2012Expiry Date: 24-Sept-2012


Premium: Zero CostBuyer: You Seller: AFEX


Example for Importer: You have ongoing exposure to currency fluctuations and need to buy USD. You acknowledge that AUDUSD may appreciate in your favour and would like to benefit from it if it happens. You are not comfortable booking at the prevailing Forward Rate. This strategy gives you the right to sell AUD and buy USD at 1.0000, and if the Spot Rate moves below 1.0000 you will profit from the higher rate, providing the Knock-Out Level has not been breached during the Knock-Out Period. If the Spot Rate trades at 0.9000 at any point during the Knock-Out Period you will be left un-hedged and may wish to buy USD in the Spot Market.

Example Strategy: The strategy provides an improved Strike Rate to the outright Forward Rate. If at any point during the Knock-Out Period the Spot Rate breaches the Knock-Out Level you will be left un-hedged and may decide to transact in the Spot Market.

There are two potential outcomes at Expiry Time:

Scenario A: If the AUDUSD Spot Rate has traded at or below the Knock-Out level of 0.9000 at any point during the Knock-Out Period, you will be left un-hedged and may wish to trade in the Spot Market, which is likely to be considerably lower than 1.0000.

Scenario B: If the AUDUSD Spot Rate has not traded at the Knock-Out Level of 0.9000 at any point during the Knock-Out Period, you have the obligation to sell AUD and buy USD at 1.0000 at expiry.

Payoff: This Knock-Out Forward offers a Strike Rate higher than the current Forward Rate, if 0.9000 is not breached during the Knock-Out Period, in which case you will be buying USD at 1.0000, which is a rate that was not achievable at the time you booked the contract.

Significant Benefits: The Significant Benefits associated with Knock-Out Forwards are:

• They can be structured at zero cost.• They provide a Strike Rate that is better than the current

Forward Rate available when the con tract is booked, if the Knock-Out Level is not then breached.


Significant Risks: The Significant Risks associated with Knock-Out Forwards are:

• They do not offer a guaranteed Protection Rate.• Your profit from a favourable move of AUDUSD is limited

to the Strike Rate.• See page 36 of this PDS for other risks.


Strategy Details - AUDUSD Knock-Out Forward (Importer)

Scenario A

Scenario B

Strategy Details - AUDUSD Knock-Out Forward Extra (Exporter)

Currency Pair:

AUDUSD

Notional Amount: USD 100,000

Strike Rate:

1.0000

Knock-Out Level: 1.0600Barrier Level: 0.9700

Knock-Out Period and Barrier Period start date:

28-June-2012

Knock-Out Period and Barrier Period end fate:

27-Sept-2012

Expiry Date: 27-Sept-2012Delivery Date: 02-Oct-2012

Expiry Time: 3.00 p.m. Tokyo timePremium: Zero Cost

Buyer: You

Seller: AFEX


Knock-out Forward Extra

A Knock-Out Forward Extra is a type of Structured Option which provides a known Strike Rate for future exchange requirements with the opportunity to participate in favourable exchange rate movements, provided the currency pair has not breached a pre-specified Barrier Level during the pre-specified Barrier Period If the Barrier Level has been breached at any time during the Barrier Period, you will be obliged to trade the full Notional Amount at the known Strike Rate. Also, if the Spot Rate breaches the pre-determined Knock-Out Level at any time during the pre-specified Knock-Out Period, the trade ceases to exist and there are no obligations on either party.

Example for Exporter: You have an ongoing exposure and need to Buy AUD. You acknowledge that AUDUSD may depreciate in your favour and would like to benefit from it if it happens. However, you also recognize the upside risks and would like to achieve a maximum rate of 1.0000. This strategy gives you the right to sell USD and buy AUD at 1.0000, and if the Spot Rate is in between 1.0000 and 0.9700 you will profit from the lower rate, providing 0.9700 has not been breached during the Barrier Period. However, if the Spot Rate breaches 1.0600, the pre-determined Knock-Out Level, at any point during the Knock-Out Period, the trade ceases to exist and there are no obligations on either party.

There are four potential outcomes at Expiry Time:

Scenario A: The AUDUSD Spot Rate traded at or below 1.0000 during the Barrier Period and has not breached 1.0600 during the Knock-Out Period. You are obliged to sell USD and buy AUD at 1.0000.

Scenario B: The AUDUSD Spot Rate is below 1.0000 on expiry and has not traded at or below 0.9700 during the Barrier Period or breached 1.0600 during the Knock-Out Period. You have no obligation and can transact within the prevailing Spot Market.

Scenario C: The AUDUSD Spot Rate is above 1.0000 on expiry and has not traded at or below 0.9700 during the Barrier Period, and has not breached 1.0600 during the Knock-Out Period. You have the right to sell USD and buy AUD at 1.0000.

Scenario D: The AUDUSD Spot Rate has traded at or above 1.0600 during the Knock-Out Period. You are left un-hedged and may wish to trade in the Spot Market, which is likely to be considerably higher than 1.0000.


Scenario A

Scenario B

Currency Pair:

AUDUSD

Notional Amount: USD 100,000 Strike Rate: 0.9800

Knock-Out Level: 0.9500Barrier Level: 1.0300

Knock-Out Period and Barrier Period start date:

28-June-2012

Knock-Out Period and Barrier Period end date:

27-Sept-2012

Expiry Date: 27-Sept-2012Delivery Date: 02-Oct-2012

Expiry Time: 3.00 p.m. Tokyo timePremium: Zero Cost

Buyer: You Seller: AFEX


Payoff: This Knock-Out Forward Extra gives you the opportunity to receive a more favourable Strike Rate than would be available at that time on a Forward Extra without the Knock-Out feature. You will also profit from any favourable moves in the Spot Market unless the Barrier Level has been breached (in which case you will be obligated to trade at the Strike Rate) or the Knock Out Level has been breached (in which case you will be left un-hedged) meaning you may have to transact in the Spot Market which is likely to be considerably worse than the Strike Rate.

Payoff Profile: Budget Rate:This structure does not offer a guaranteed Budget Rate or Protection Rate.

Example for Importer: You have an ongoing exposure and need to buy USD. You acknowledge that AUDUSD may appreciate in your favour and would like to benefit from it if it happens. However, you also recognize the downside risks and would like to achieve a minimum rate of 0.98 which can be used as your Budget/Protection Rate. This strategy gives you the right to sell AUD and buy USD at 0.9800, and if the Spot Rate is in between 0.9800 and 1.0300 you will profit from the higher rate, providing the Barrier Level of 1.0300 has not been breached during the Barrier Period. Furthermore, if the Spot Rate breaches 0.9500, the pre-determined Knock-Out Level, at any point during the Knock-Out Period, the trade ceases to exist and there are no obligations on either party.


Scenario C Scenario D

Strategy Details - AUDUSD Knock-Out Forward Extra (Importer)



Scenario A: The AUDUSD Spot Rate traded at or above 1.0300 during the Barrier Period and has not breached 0.9500 during the Knock-Out Period. You are obliged to sell AUD and buy USD at 0.9800.

Scenario B: The AUDUSD Spot Rate is above 0.9800 on expiry and has not traded at or above 1.0300 during the Barrier Period or breached 0.9500 during the Knock-Out Period. You have no obligation and can transact within the prevailing Spot Market.

Scenario C: The AUDUSD Spot Rate is below 0.9800 on expiry and has not traded at or above 1.0300 during the Barrier Period, and has not breached 0.9500 during the Knock-Out Period. You have the right to sell AUD and buy USD at 0.9800.

Scenario D: The AUDUSD Spot Rate has traded at or below 0.9500 during the Knock-Out Period. You are left un-hedged and may wish to trade in the Spot Market, which is likely to be considerably lower than 0.9800.

Payoff: This Knock-Out Forward Extra gives you the opportunity to receive a more favourable Strike Rate than would be available at that time on a Forward Extra without the Knock-Out feature. You will also profit from any favourable moves in the Spot Market unless the Barrier Level has been breached (in which case you will be obligated to trade at the Strike Rate) or the Knock Out Level has been breached (in which case you will be left un-hedged) meaning you may have to transact is a Spot Market which is likely to be considerably worse than the Strike Rate.


Scenario C

Scenario D

Scenario A Scenario B


Payoff Profile - Budget Rate:This structure does not offer a guaranteed Budget Rate or Protection Rate.

Significant Benefits: The Significant Benefits associated with Knock-Out Forward Extras are:

• They can be structured at zero cost.• You get a more favourable Strike Rate than a Forward

Extra without the Knock-Out feature.• They allow a profit vs. the Budget Rate if the Spot Rate

is higher (for exporters) or lower (for importers) than the Strike Rate at Expiry Time and hasn’t touched the Barrier Level or Knock-Out Level during the relevant period.


Significant Risks: The Significant Risks associated with Knock-Out Forward Extras are:

• The zero cost Knock-Out Forward Extra does not offer a known Protection Rate.

• You will be left un-hedged if the Spot Rate breaches the Knock-Out Level.

• Your participation in profit from a favourable move of AUD/USD is limited to the Barrier Level.


Knock-Out Ratio Forward

A Knock-Out Ratio Forward is a type of Structured Option which provides a potential enhanced Strike Rate for future exchange requirements which is better than the prevailing Forward Rate. The amount you may be required to exchange is dependent upon where the Spot Rate is on the Expiry Date. Also, if the Spot Rate breaches the pre-determined Knock-Out Level at any time during the pre-specified Knock-Out Period, the trade ceases to exist and there are no obligations on either party.

Example for Exporter: You have an ongoing exposure and need to sell USD and buy AUD. You are not comfortable with the current Forward Rate because it is too expensive, and you are willing to take on some risk in exchange for a potentially more beneficial rate. This strategy gives you the right to buy AUD and sell USD at 0.9900, unless the Spot Rate has breached the Knock-Out Level. If the Spot Rate has not breached the Knock-Out Level of 1.1000 during the Knock-Out Period then there are 2 potential outcomes - If the AUDUSD Spot Rate is at or below 0.9900 on the expiry date you will be obligated to exchange the Ratio Amount at 0.9900. If the AUDUSD Spot Rate is above 0.9900 on the


expiry date you will have the right to exchange the Notional Amount at 0.9900. However, if the Spot Rate has breached the Knock-Out Level of 1.1000 during the Knock-Out Period then the trade ceases to exist and there are no obligations on either party.

Strategy Details – AUDUSD Knock-Out Ratio Forward (Exporter)

Currency Pair: AUDUSDNotional Amount: USD 100,000

Ratio Amount USD 200,000Enhanced Forward/Strike Rate 0.9900

Knock-Out Level: 1.100Expiry Date: 27-Sept-2012


Premium: Zero Cost


There are three potential outcomes at expiry:

Scenario A: The AUDUSD Spot Rate has breached 1.1000 during the Knock-Out Period. The trade ceases to exist and there are no obligations on either party. If you trade you will be required to do so at a significantly less beneficial Spot Rate.

Scenario B: The AUDUSD Spot Rate is at or below 0.9900 on the Expiry Date. You are obligated to buy AUD and sell USD at 0.9900 for the Ratio Amount.

Scenario C: The AUDUSD Spot Rate is above 0.9900 on the expiry date. You have the right but not the obligation to buy AUD and sell USD at 0.9900 for the Notional Amount.

Payoff: This Knock-Out Ratio Forward gives you a significantly more favourable Strike Rate than would be available at that time on a Forward Contract. If, on expiry, the Spot Rate is above the Strike Rate then you will deal the Notional Amount at the Strike Rate and will be un-hedged at a higher market level than the Strike Rate on any remaining exposure you have. If, on expiry, the Spot Rate is at or below the Strike Rate you will be obligated to deal the Ratio Amount at the Strike Rate.


Scenario A

Scenario B

Scenario C


Example for Importer: You have an ongoing exposure and need to buy USD and sell AUD. You are not comfortable hedging at the current Forward Rate because it is too expensive, and you are willing to take on some risk in exchange for a potentially more beneficial rate. This strategy gives you the right to sell AUD and buy USD at 1.0200, unless the Spot Rate has breached the Knock-Out Level. If the Spot Rate has not breached the Knock-Out Level of 0.9000 during the Knock-Out Period then there are 2 potential outcomes - If the AUDUSD Spot Rate is at or above 1.0200 on the expiry date you will be obligated to exchange the Ratio Amount at 1.0200. If the AUDUSD Spot Rate is below 1.0200 on the Expiry Date you will have the right to exchange the Notional Amount at the Strike Rate of 1.0200. However, if the Spot Rate has touched the Knock-Out Level of 0.9000 during the Knock-Out Period then the trade ceases to exist and there are no obligations on either party.


Scenario A: The AUDUSD Spot Rate has breached 0.9000 during the Knock-Out Period. The trade ceases to exist and there are no obligations on either party. If you trade you will be required to do so at a significantly less beneficial Spot Rate.

Scenario B: The AUDUSD Spot Rate is at or above 1.0200 on the expiry date. You are obligated to sell AUD and buy USD at 1.0200 for the Ratio Amount.

Scenario C: The AUDUSD Spot Rate is below 1.0200 on the expiry date. You have the right but not the obligation to sell AUD and buy USD at 1.0200.


Scenario A

Scenario B

Scenario C

Strategy Details – AUDUSD Knock-Out Ratio Forward (Importer)

Currency Pair: AUDUSD


Ratio Amount: USD 200,000

0.9000Knock-Out Level: Knock-Out Period Start

Date: 28-June-2012

Knock-Out Period End Date:

27-Sept-2012

Strike Rate: 1.0200

Expiry Date: 27-Sept-2012

Expiry Time: 3.00 p.m. Tokyo time

Delivery Date: 02-Oct-2012

Premium: Zero CostBuyer: YouSeller: AFEX


Payoff: This Knock-Out Ratio Forward gives you a significantly more favourable Strike Rate than would be available at that time on a Forward Contract. If, on expiry, the Spot Rate is below the Strike Rate then you will deal the Notional Amount at the Strike Rate and will be un-hedged at a lower market level than the Strike Rate on any remaining exposure you have. If, on expiry, the Spot Rate is at or above the Strike Rate you will be obligated to deal the Ratio Amount at the Strike Rate.

Significant Benefits: The Significant Benefits associated with Knock-Out Ratio Forwards are:

• They can be structured at zero cost.• They can offer a significantly more favourable Strike Rate

than a standard Forward Contract.• See page 36 of this PDS for other benefits.

Significant Risks: The Significant Risks associated with Knock-Out Ratio Forwards are:

• There is no Protection Rate.• If the Spot Rate does breach the Knock-Out Level then

you will be left completely un-hedged. If you trade you will be required to do so at a significantly less beneficial Spot Rate.

• If the Spot Rate does not breach the Knock-Out Level then you will either be left un-hedged on the difference between the Ratio Amount and Notional Amount or you will be obligated to trade the difference at a less favourable rate than is available in the Spot Market at that time.


Knock-out Ratio Forward Extra

A Knock-Out Ratio Forward Extra is a type of Structured Option which provides a potential enhanced Strike Rate for future exchange requirements with the opportunity to participate in favourable exchange rate movements, provided the currency pair has not breached a pre-specified Barrier Level. If the Barrier Level is breached at any time during the pre-specified Barrier Period then you will be required to exchange the Ratio Amount at the Strike Rate. However, if the Knock-Out Level is breached any time during the pre-specified Knock-Out Period the trade ceases to exist, there are no obligations on either party and you are unhedged.

Example for Exporter: You have an ongoing exposure and need to sell USD and buy AUD. You acknowledge that AUDUSD may depreciate in your favour and would like to

benefit if that happens. However, you also recognize the upside risks and would like to achieve a maximum rate of 0.9900. This strategy gives you the right to buy AUD and sell USD at 0.9900 on the Notional Amount, and if the Spot Rate is in between 0.9900 and the Barrier Level, you will profit from the lower rate, unless the Barrier Level has been breached during the Barrier Period in which case you will be obligated to trade the Ratio Amount at 0.9900. Furthermore, if the Spot Rate breaches the pre-determined Knock-Out Level during the Knock-Out Period, the trade ceases to exist and there are no obligations on either party.There are four potential outcomes at Expiry Time:


Strategy Details - AUDUSD Knock-Out Ratio Forward Extra (Exporter)

Currency Pair:

AUDUSD

Notional Amount: USD 100,000Ratio Amount: USD 200,000

Strike Rate: 0.9900Barrier Level: 0.9500

Barrier Period and Knock-Out Period start date: 28-June-2012

Barrier Period and Knock-Out Period end Date:

27-Sept-2012

Knock-Out Level: 1.0400Expiry Date: 27-Sept-2012Expiry Time: 3.00 pm Tokyo time

Delivery Date: 02-Oct-2012Premium: Zero Cost

Buyer: YouSeller:

AFEX

Scenario A


Scenario A: If the AUDUSD Spot Rate has traded at the Knock-Out Level at any point during the Knock-Out Period the trade ceases to exist and there are no obligations on either party. If you trade you will be required to do so at a significantly less beneficial Spot Rate.

Scenario B: If the AUDUSD Spot Rate has traded at or below the Barrier Level at any point during the Barrier Period, you are obliged to buy AUD and sell USD at the Strike Rate of 0.9900, regardless of where the exchange rate is on the expiry date, for the Ratio Amount.

Scenario C: If the AUDUSD Spot Rate is above 0.9900 and has not traded at or below the Barrier Level during the Barrier Period you have the right, but not the obligation, to sell USD and buy AUD at 0.9900.

Scenario D: If the AUDUSD Spot Rate is below 0.9900 and has not traded at or below the Barrier Level during the Barrier Period, you are free to trade in the Spot Market, a rate more favourable than 0.9900.

Payoff: This Knock-Out Ratio Forward Extra gives you a significantly more favourable Strike Rate than would be available at that time on a Forward Extra Contract without the Ratio or Knock-Out Elements. If, on the Expiry Date, the Spot Rate is above the Strike Rate then you will deal the Notional Amount at the Strike Rate and will be unhedged at a lower market level than the Strike Rate on any remaining exposure you have. You will profit versus the Strike Rate if, on expiry, the Spot Rate is below the Strike Rate and has not breached the Barrier Level during the Barrier Period. If the Barrier Level has been breached during the Barrier Period, you will be obligated to deal the Ratio Amount at the Strike Rate and so your overall pay-off is considerably worse than if you had done nothing. If the Spot Rate breaches the Knock-Out Level then the trade ceases to exist and you will be unhedged at a time when the Spot Rate is considerably higher than 0.9900.


Scenario B

Scenario C

Scenario D


Example for Importer: A Knock-Out Ratio Forward Extra provides a known Strike Rate for future exchange requirements with the opportunity to participate in favourable exchange rate movements, provided the currency pair has not breached a pre-specified Barrier Level. If the Barrier Level is breached at any time during the Barrier Period, then you will be required to exchange the Ratio Amount at the Strike Rate. However, if the Knock-Out Level is breached the trade ceases to exist, there are no obligations on either party and you are unhedged.


Scenario A: If the AUDUSD Spot Rate has traded at or below the Knock-Out Level at any point during the Knock-Out Period the trade ceases to exist and there are no obligations on either party. If you trade you will be required to do so at a significantly less beneficial Spot Rate.


Scenario A

Scenario B

Scenario C

Scenario D

Strategy Details - AUDUSD Knock-Out Ratio Forward Extra (Importer)


Ratio Amount: USD 200,000Strike Rate: 1.0000

Barrier Level: 1.1000Barrier Period and Knock-

Out Period Start Date: 28-June-2012Knock-Out Level: 0.9000

Barrier Period and Knock-Out Period End Date: 27-Sept-2012

Expiry Date: 27-Sept-2012Expiry Time: 3.00 pm Tokyo time

Delivery Date: 02-Oct-2012Premium: Zero Cost


Scenario B: If the AUDUSD Spot Rate has traded at or above the Barrier Level at any point during the Barrier Period, you are obliged to sell AUD and buy USD at the Strike Rate of 1.0000, regardless of where the Spot Rate is on the Expiry Date, for the Ratio Amount.

Scenario C: If the AUDUSD Spot Rate is below 1.0000 and has not traded at or above the Barrier Level during the Barrier Period you have the right, but not the obligation, to buy USD and sell AUD at 1.0000.

Scenario D: If the AUDUSD Spot Rate is above 1.0000 and has not traded at or above the Barrier Level during the Barrier Period you are free to trade in the Spot Market, a rate more favourable than 1.0000.

Payoff: This Knock-Out Ratio Forward Extra gives you a significantly more favourable Strike Rate than would be available at that time on a Forward Extra Contract without the Ratio or Knock-Out Elements. If, on expiry, the Spot Rate is below the Strike Rate then you will deal the contract amount at the Strike Rate and will be unhedged at a lower market level than the Strike Rate on any remaining exposure you have. You will profit versus the Strike Rate if, on expiry, the Spot Rate is above the Strike Rate and has not breached the Barrier Level during the Barrier Period. If the Barrier Level has been breached during the Barrier Period, you will be obligated to deal the Ratio Amount at the Strike Rate and so your overall pay-off is considerably worse than if you had done nothing. If the Spot Rate breaches the Knock-Out Level then the trade ceases to exist and you will be unhedged at a time when the Spot Rate is considerably lower than 1.0000.

Significant Benefits: The Significant Benefits associated with Knock-Out Ratio Forward Extras are:

• They offer a significantly better Strike Rate than would be available at that time on a Forward Extra without the Ratio or Knock-Out features.

• They are structured at zero cost.• Providing the Spot Rate hasn’t breached the Knock-

Out Level it allows a profit vs. the Strike Rate if the Spot Rate ends up in between 1.0000 and the Barrier Level specified above at expiry but hasn’t touched the Barrier Level during the Barrier Period.


Significant Risks: The Significant Risks associated with Knock-Out Ratio Forward Extras are:

• Your participation in profit from a favourable move of AUDUSD is limited if the Barrier Level is breached.

• If the Knock-Out Level is breached then you are left unhedged so that if you trade you will be required to do so at a significantly less beneficial Spot Rate.

• If the Barrier Level is breached you are obliged to deal the Ratio Amount at the Strike Rate.


Ratio Forward

A Ratio Forward is a type of Structured Option which provides a potential enhanced Strike Rate for future exchange requirements which is better than the prevailing Forward Rate. The amount you may be required to exchange is dependent upon where the Spot Rate is on the Expiry Date.

Example for Exporter: You have an ongoing exposure and need to sell USD and buy AUD. You recognize the upside risks and would like to protect against AUD moving higher, however you are not comfortable hedging at the current Forward Rate because it is too expensive, and you are willing to take on some risk in exchange for a potentially more beneficial rate. This strategy gives you the right to sell USD and buy AUD at 1.0000. If the AUDUSD Spot Rate is at or below 1.0000 on the expiry date you will be obligated to exchange the Ratio Amount at 1.0000. If the AUDUSD Spot Rate is above 1.0000 on the Expiry Date you will have the


Strategy Details - AUDUSD Ratio Forward (Exporter)




Strike Rate: 1.0000

Expiry Date: 27-Sept-2012

Expiry Time: 3:00 pm Tokyo time


Premium: Zero Cost

Buyer: You

Seller: AFEX




Strike Rate: 1.0050

Expiry Date: 01-Oct-2012

Expiry Time: 3.00 pm Tokyo time


Premium: Zero Cost

Buyer: You

Seller: AFEX


right to exchange the Notional Amount at 1.0000There are two potential outcomes at Expiry Time:

Scenario A: The AUDUSD Spot Rate is at or below 1.0000 on the Expiry Date. You are obligated to buy AUD and sell USD at 1.0000 for the Ratio Amount.

Scenario B: The AUDUSD Spot Rate is above 1.0000 on the expiry date. You have the right but not the obligation to buy AUD and sell USD at 1.0000.

Payoff: This Ratio Forward gives you a more favourable Strike Rate than would be available at that time on a Forward Contract. If, on expiry, the Spot Rate is above the Strike Rate then you will deal the Notional Amount at the Strike Rate and will be unhedged at a higher market level than the Strike Rate on any remaining exposure you have. If, on expiry, the

Spot Rate is at or below the Strike Rate you will be obligated to deal the Ratio Amount at the Strike Rate and will therefore be dealing at a less favourable level on the difference between the Ratio Amount and the Notional Amount than if you had not considered that amount as part of this strategy.

Payoff Profile: Budget Rate:This structure offers a guaranteed rate on the Notional Amount. This rate can be used as the Budget Rate for the Notional Amount only.

Example for Importer: You have an ongoing exposure and need to buy USD and sell AUD. You recognize the downside risks and would like to protect against AUDUSD moving lower, however you are not comfortable hedging at the current Forward Rate because it is too expensive, and you are willing to take on some risk in exchange for a potentially more beneficial rate. This strategy gives you the right to sell AUD and buy USD at 1.0050. If the AUDUSD Spot Rate is at or above 1.0050 on the expiry date you will be obligated to exchange the Ratio Amount at 1.0050. If the AUDUSD Spot Rate is below 1.0050 on the expiry date you will have the right to exchange the Notional Amount at 1.0050.


There are two potential outcomes at Expiry Time:

Scenario A: The AUDUSD Spot Rate is at or above 1.0050 on the expiry date. You are obligated to sell AUD and buy USD at 1.0050 for the Ratio Amount.

Scenario B: The AUDUSD Spot Rate is below 1.0050 on the expiry date. You have the right but not the obligation to sell AUD and buy USD at 1.0050 for the Notional Amount.

Scenario A

Scenario B

Strategy Details - AUDUSD Ratio Forward (Importer)


Payoff: This Ratio Forward gives you a more favourable Strike Rate than would be available at that time on a Forward Contract. If, on the Expiry Date, the Spot Rate is below the Strike Rate then you will deal the Notional Amount at the Strike Rate and will be unhedged at a lower market level than the Strike Rate on any remaining exposure you have. If, on the Expiry Date, the Spot Rate is at or above the Strike Rate you will be obligated to deal the Ratio Amount at the Strike Rate and will therefore be dealing at a less favour-able level on the difference between the Ratio Amount and the Notional Amount than if you had not considered that amount as part of this strategy.

Payoff Profile - Budget Rate:This structure offers a guaranteed rate on the Notional Amount. This rate can be used as the Budget Rate for the Notional Amount only.

Significant Benefits: The Significant Benefits associated with Ratio Forwards are:

• They can be structured at zero cost.• They give a more favourable Strike Rate than a standard

Forward Contract.• See page 36 of this PDS for other benefits.

Significant Risks: The Significant Risks associated with Ratio Forwards are:

• The Ratio Forward does not offer a known Protection Rate for the whole of your exposure.

• You will either be left unhedged on the difference between the Ratio Amount and Notional Amount in which case the Spot Rate will be less favourable than the Strike Rate or you will be obligated to trade the difference at a less favourable rate than is available in the Spot Market at that time.



Scenario A

Scenario B


Ratio Forward Extra

A Ratio Forward Extra is a type of Structured Option which provides a potential enhanced Strike Rate for future exchange requirements with the opportunity to participate in favourable exchange rate movements, provided the currency pair has not breached a pre-specified Barrier Level. If the Barrier Level is breached at any time during the pre-specified Barrier Period, then you will be required to exchange the Ratio Amount at the Strike Rate.

Example for Exporter: You have an ongoing exposure and need to sell USD and buy AUD. You acknowledge that AUDUSD may depreciate in your favour and would like to benefit if that happens. However, you also recognize the upside risks and would like to achieve a maximum rate of 0.9900 which can be used as the Budget Rate for the Notional Amount. This strategy gives you the right to buy AUD and sell USD at 0.9900 on the Notional Amount, and if spot is in between 0.9900 and the Barrier Level, you will profit from the lower rate, unless the Barrier Level has been breached during the Barrier Period in which case you will be obligated to trade the Ratio Amount at 0.9900.


Scenario A: If the AUDUSD Spot Rate has traded at or below the Barrier Level at any point during the Barrier Period, you are obliged to buy AUD and sell USD at the Strike Rate of 0.9900, regardless of where the exchange rate is on the Expiry Date - “For the Ratio Amount”.

Scenario B: If the AUDUSD Spot Rate is above 0.9900 and has not traded at or below the Barrier Level during the Barrier Period you have the right, but not the obligation, to buy AUD and sell USD at 0.9900 for the Notional Amount.


Scenario A

Scenario B

Scenario C

Strategy Details – AUDUSD Ratio Forward Extra (Exporter)


Ratio Amount: USD 200,000Strike Rate: 0.9900

Barrier Level: 0.9300Barrier Period Start Date: 29-June-2012

Barrier Period End Date: 01-Oct-2012Expiry Date: 01-Oct-2012

Delivery Date: 03-Oct-2012Expiry Time: 3.00 pm Tokyo time

Premium: Zero Cost Buyer: YouSeller: AFEX


Notional Amount: USD 100,000Ratio Amount: USD 200,000

Strike Rate: 0.9900

Barrier Level: 1.0600

Barrier Period Start date:

29-June-2012

Barrier Period End Date:

01-Oct-2012

Expiry Date: 01-Oct-2012


Expiry Time: 3.00 pm Tokyo time

Premium: Zero Cost

Buyer: You

Seller: AFEX


Scenario C: If the AUDUSD Spot Rate is below 0.9900 and has not traded at or below the Barrier Level during the Barrier Period, you are free to trade in the Spot Market, at a rate more favourable than 0.9900. you had done nothing.

Payoff: This Ratio Forward Extra gives you a significantly more favourable Strike Rate than would be available at that time on a Forward Extra Contract without the Ratio element. If, on expiry, the Spot Rate is above the Strike Rate then you will deal the Notional Amount at the Strike Rate and will be unhedged at a higher market level than the Strike Rate on any remaining exposure you have. You will profit versus the Strike Rate if, on expiry, the Spot Rate is below the Strike Rate and has not breached the Barrier Level during the Barrier Period. If the Barrier Level has been breached during the Barrier Period, you will be obligated to deal the Ratio Amount at the Strike Rate and so your overall pay-off is considerably worse than if you had done nothing.

Payoff Profile - Budget Rate:The Strike Rate, 0.9900 for the Ratio Amount, specifies a budget rate for the Notional Amount. It does not specify a Budget Rate for the Ratio Amount.

Example for Importer: You have an ongoing exposure and need to buy USD and sell AUD at the end of each month. You acknowledge that AUDUSD may appreciate in your favour and would like to benefit if that happens. However, you also recognize the downside risks and would like to achieve a minimum rate of 0.9900 which can be used as the Budget Rate for the Notional Amount. This strategy gives you the right to sell AUD and buy USD at 0.9900 on the Notional Amount, and if the Spot Rate is in between 0.9900 and the Barrier Level, you will profit from the higher rate, unless the Barrier Level has been breached during the Barrier Period in


which case you will be obligated to trade the Ratio Amount at 0.9900.

Strategy Details – AUDUSD Ratio Forward Extra (Importer)

Scenario A

Scenario B

Scenario C



Scenario A: If the AUDUSD Spot Rate has traded at or above the Barrier Level at any point during the Barrier Period, you are obliged to sell AUD and buy USD at the Strike Rate of 0.9900, regardless of where the exchange rate is on the Expiry Date for the Ratio Amount.

Scenario B: If the AUDUSD Spot Rate is below 0.9900 and has not traded at or above the Barrier Level during the Barrier Period you have the right, but not the obligation, to buy USD and sell AUD at 0.9900 for the Notional Amount.

Scenario C: If the AUDUSD Spot Rate is above 0.9900 and has not traded at or above the Barrier Level during the Barrier Period, you are free to trade in the Spot Market, a rate more favourable than 0.9900.

Payoff: This Ratio Forward Extra gives you a significantly more favourable Strike Rate than would be available at that time on a Forward Extra Contract without the Ratio Element. If, on expiry, the Spot Rate is above the Strike Rate then you will deal the Notional Amount at the Strike Rate and will be unhedged at a higher market level than the Strike Rate on any remaining exposure you have. You will profit versus the Strike Rate if, on expiry, the Spot Rate is below the Strike Rate and has not breached the Barrier Level during the Barrier Period. If the Barrier Level has been breached during the Barrier Period, you will be obligated to deal the Ratio Amount at the Strike Rate and so your overall pay-off is considerably worse than if you had done nothing.

Payoff Profile - Budget Rate:The Strike Rate, 0.9900, specifies a Budget Rate for the Notional Amount.

It does not specify a Budget Rate for the Ratio Amount.

Significant Benefits: The Significant Benefits associated with Ratio Forward Extras are:

• They can be used to establish a budget rate for selling AUD and buying USD in the case of Importers, or buying AUD and selling USD in the case of Exporters.

• They are structured at zero cost.• They allow a profit vs. the Budget Rate if the Spot Rate

ends up in between the Strike Rate and the Barrier Level specified above at the Expiry Date but hasn’t breached the Barrier Level during the Barrier Period.


Significant Risks: The Significant Risks associated with Ratio Forward Extras are:

• Your participation in profit from a favourable move of AUDUSD is limited to the Barrier Level.

• If the Barrier Level is breached you are obliged to deal the Ratio Amount at the Strike Rate.




Terms and Conditions

Each Foreign Exchange Transaction and Foreign Exchange Derivative Transaction is subject to the terms and conditions outlined in the Account Application you completed and signed when you opened your account with AFEX. We are not liable for any loss that arises from incorrect identification information being provided by you.

You will be required to indemnify us for any loss that occurs as a result of AFEX:• Acting in good faith on your verbal or written instructions;

or• Having to cancel a transaction.

Unless you have disclosed to us that you are acting in trustee capacity or on behalf of another party, you warrant that you are acting on your own behalf when purchasing this product from us.

When you use our services, you are promising that you will not breach any law in Australia or any other country.

When providing instructions by telephone, you will need to provide us with adequate identification information.

Foreign Exchange Option Partial or Full Pre-Delivery

Partial or Full Pre-delivery is allowed on some of the Structured Option products that do not have a “Knock Out” parameter and must be for a minimum amount of AUD 50,000. The pre-delivery of the contract will be processed at the Worst Case Rate. Should an option be “Knocked In” then there is no minimum amount of pre-delivery.

Cancellation

We reserve the right to cancel any contract immediately in circumstances set out in our terms and conditions. Those circumstances include (but are not limited to) your insolvency, non-payment or late payment, or for a breach by you of our terms and conditions.

If at any time you choose to cancel or alter a Foreign Exchange Transaction with us, you will have to pay any costs and/or exchange rate losses that we incur.

You may request that a Foreign Exchange Transaction be cancelled at any time before the Value Date. If you use a Foreign Exchange Transaction to cover an obligation that

ceases to exist, or that changes, or if for any other reason you need to close out the contract prior to the final date of the contract, then the contract may need to be cancelled. If the contract is cancelled, you will be liable for any loss due to the closure of this contract. Where possible, we will provide you with a quote for the cost of the cancellation.

• Cancelling Spot Value, Value Today, Value Tomorrow, Outright Forward and Window Forward Contracts requires us to conduct an opposite transaction to offset the transaction. We will pass all these costs on to you, which will usually be calculated by considering your original agreed locked in rate, and the cost that AFEX must pay in purchasing an opposite contract at the prevailing rate. This is required in order for AFEX to cancel out the original Forward Contract. Payment would be due within 24 hours of the cancellation.

• Cancelling Vanilla Options and Structured Options is a complex matter requiring the buy-back of the option(s) by us. The cancellation pricing will be determined by the same factors (including the contract exchange rate, Interest Rate Differential, currency type, amount and expiry date) used when pricing the original contract. These will be adjusted taking into consideration the prevailing market Foreign Exchange Rates, the remaining term of the contract, the Forward Rate, Interest Rates Differentials, and volatility associated with the currencies. These factors combine to determine the cancellation price. If you accept the cancellation price then the contract will be cancelled and the cancellation price will become payable. Payment is due within 24 hours of cancellation. You may lose money as a result of this action, but where possible, you will be provided with a quote for cancellation, based on the factors described above.

When cancelling a Foreign Exchange Transaction, third parties (such as banks) may impose fees which we will pass on to you.

Client Money

Any money you pay us when you purchase one of the products described in this PDS becomes our money at the time of payment, and we have a corresponding obligation to you under the relevant contract to make the payment or provide the option, depending on the arrangement.

In the event of insolvency of AFEX, you will be an unsecured creditor to the extent that you have a claim against us for amounts you have already paid under an existing contract



that has not been settled. The extent to which you may recover your proportional entitlement will be determined by applicable insolvency laws in Australia subject to any contractual arrangements you have with us (e.g. the set-off and netting rights of AFEX against client money, under our terms and conditions).

However, we may agree at times for you to place money in our segregated funds account, say, if you anticipate making trades in the future but have not nominated the funds for a particular trade or trades. In this situation, the funds are segregated from our own funds and property. This means that they are not available to pay general creditors in the event of receivership or liquidation by AFEX. However, in that situation, by paying us money in this way, you authorise us to retain any interest on that money, and to use that money (including to deduct reasonable fees) in any way agreed to as set out in this PDS, the terms and conditions, or as otherwise agreed with you.

Significant Benefits of Our Products

In addition to the benefits already outlined in this PDS, the significant benefits of using our products are:

• Manage Volatility We can offer products that manage the risk that the

Foreign Exchange Rate will move in an ad verse direction.

• Provide Cash Flow Certainty Depending on the products chosen, Foreign Exchange

Transactions generally allow you to agree to a rate of exchange now, for a time in the future. This will help you to determine the exact cost of that currency, giving certainty over the flow of funds.

• Tailored and Flexible We can tailor the transaction to meet your specific

circumstances. Unlike exchange traded products, our over-the-counter contracts are not standardised and can be personally tailored to suit your requirements. For example, AFEX allows you to enter into transactions in small amounts and the Value Date is negotiable, whereas exchange traded products are a standard size and cannot be varied in duration.

• Virtual 24 Hour Trading We offer an on-line platform that helps you trade simply

and easily, 24 hours a day.

• High Level of Liquidity The foreign exchange market is very liquid enabling AFEX

to efficiently manage its risks by entering into transactions with its hedging counterparties. The liquidity comes mainly from large and smaller banks that provide liquidity to investors, companies, institutions and other currency market players.

• Real time quotes AFEX uses sophisticated technology and/or liquidity

providers (counterparties) in order to offer you up-to-the-minute quotes.

Significant Risks of Our Products

The following is a description of significant risks associated with trading products offered by AFEX.

• Product Risks It is important to note that when a product in this PDS is

described as “zero cost”, that means that there is no up-front cost. Depending on the movement of the Spot Rate, you may be required to trade at a price that is far less favourable than if you had not entered into the agreement at all. “Zero cost” means you are limiting your advantage, or selling some of your opportunity to gain. By Selling this advantage you are able to have a counterparty cover the cost of this product, making it zero cost. If a product in this PDS has a Strike Rate that is more advantageous than the current Forward Rate, then it is likely that it is a riskier product. You will be “selling” some sort of protection (even if it is just the opportunity to increase a gain) in order to bring your up-front price down.

• Extension of Contracts If you do not pay for your contract within the stipulated

time, AFEX may, at your request, extend or “roll” your contract to another date by when you are expected to make full settlement for that contract. This will cause a delay in the outgoing payment of your contract and you will also be charged for the extension of the contract.

Extension of a contract is not allowed for Vanilla Options

or Structured Options.

When a contract is extended on your behalf, AFEX is entitled to request for a deposit to be paid on that contract to cover the current mark to market loss or potential mark to market loss on that contract.



• Deposit We may require you to pay a deposit towards the

transaction, before or any time after we allow you to enter into an Outright Forward Contract or Window Forward Contract.

• Partial Prepayment As part of our risk management process AFEX carries out

a mark to market revaluation of all outstanding Foreign Exchange Transaction contracts on a daily basis.

If during this process your Foreign Exchange Transaction contract(s) move out of the money beyond a predetermined amount or percentage of the contract amount, we may seek from you an Additional Partial Prepayment as an offset to bring your Foreign Exchange Transaction contract’s risk exposure back to an agreed level.

It may be necessary for an Additional Partial Prepayment to be made by you should the revaluation continue to move further out of the money during the term of the contract.

The Partial Prepayment is repaid to you or is set off against any amount owing to us by you under any agreement, when the contract is due, exercised, cancelled or lapses.

From time to time during the term of a Foreign Exchange Transaction contract, AFEX may require, in its sole discretion, the client to pay to AFEX certain Additional Partial Prepayments to maintain the relative value of the funds purchased from AFEX. Should the client fail to pay any Additional Partial Prepayments within twenty-four (24) hours of AFEX’s demand (or as otherwise specified by AFEX), AFEX may cancel the Foreign Exchange Transaction contract with immediate effect, or complete the transaction at AFEX’s sole discretion. In such circumstances, the client will be liable to AFEX for any and all Losses, and agrees to promptly pay for such Losses, including market losses and expenses incurred in connection with the cancellation. AFEX, however, will have no obligation or liability to the client, and AFEX’s sole liability to the client is the return of any balance remaining of the Partial Prepayment paid by the client after deducting any Losses suffered by AFEX sustained in connection with the client’s default.

E.g. You have an Outright Forward Contract for AUDUSD that is at a rate of 1.00 for buying USD 100,000, with a

10% Partial Prepayment agreement. If the AUDUSD rate unexpectedly moves 10% out of the money (or higher) than the Foreign Exchange Rate on your contract we then reserve the right to ask for 10% (or higher) of the notional value as Additional Partial Prepayment to be paid within 24 hours of the request being made so that AFEX can manage this position and protect against further adverse currency movements. This needs to be paid within the pre-agreed time limit. Should it subsequently move further out of the money we reserve the right to ask for an Additional Partial Prepayment. If the exposure goes below 10% we can return the Additional Partial Prepayment to you.

• Market Volatility Markets are subject to many influences which may result

in rapid fluctuations and reflect unforeseen events or changes in conditions with the inevitable consequence being market volatility.

Given the potential levels of volatility in the financial markets, it is therefore recommended that you closely monitor your positions with AFEX at all times, as we reserve the right to require an Additional Partial Prepayment if you have Foreign Exchange Transactions open.

In certain market conditions such as during extreme price volatility in markets, quotes provided by AFEX may ‘gap’. A gap means that a price may unexpectedly jump from one price level to another without trading at rates in between those two price levels or quotes. It is not possible for us to predict when a price ‘gap’ will occur or by how much. Price gaps are generally a result of unexpected news or previously unknown data being released (e.g. news of terrorist attacks, revaluation of a currency, geopolitical upheaval or natural disasters). In such an event AFEX reserves the right to make cash adjustments where there have been losses incurred by us as a result of an order you have active on the trading platform.

• Counterparty Risk Given you are dealing with us as a counterparty to every

transaction, you will have an exposure to us in relation to each transaction. You are reliant on our ability to meet our obligations to you under the terms of each transaction. This risk is sometimes described as counterparty risk.

In order to reduce this exposure we have the ability to enter into opposite transactions as principal in the wholesale market. Also, the financial requirements



imposed under our Australian Financial Services Licence require us to maintain certain levels of capital and liquidity.

You are also subject to our credit risk. If our business becomes insolvent we may be unable to meet our obligations to you. You can assess our financial ability to meet these counterparty obligations to you by reviewing financial information about our company. You can obtain a free copy of our summarised financial statements by contacting us by using the details at the start of this PDS.

If AFEX was to go into liquidation you would be an unsecured creditor except to the extent that funds are held upon trust for you in a segregated funds account (see page 36 which deals with client money).

• Opportunity Cost Once you have entered into a Foreign Exchange

Transaction you will have locked in the rate for your chosen currency pair and you will only be able to take advantage of subsequent favourable exchange rate movements by entering into further transactions, provided you are able to continue to meet your obligations to us.

If you buy a Vanilla Option or a Structured Option, the underlying movement in currency rates may not be enough to cover the cost of your option (i.e. the Premium).

• Leverage When you enter into a Foreign Exchange Transaction

without paying the full cost of entering into that contract, you are entering into a leveraged contract. A leveraged contract is susceptible to movements in the market that could lead to losses or gains exceeding any amounts paid towards that contract.

• System Risks AFEX relies on technology providers and systems to

provide you with its on-line system. AFEX ensures the systems are regularly updated and maintained.

A disruption to the AFEX trading platforms may mean you are unable to trade online in products offered by AFEX when you wish.

With respect to settlement, electronic funds transfers,

drafts and wires, AFEX relies on third party providers (such as banks) to assist in currency transfers between accounts. AFEX will not be able to control disruptions to these systems.

Sometimes, during a disruption, you can continue to use our financial products by contacting us over the phone using the details on the cover page of this PDS.

• Electronic Trading There are a number of risks associated with using and

relying on an on-line system. These include, but are not limited to, risks related to the use of software and/or telecommunications systems such as software errors and bugs, delays in telecommunications systems, interrupted service, data supply errors, faults or inaccuracies and security breaches.

These risks and the occurrence of disruptive events can occur with all types of services provid-ed through on-line transactions and are outside the control of AFEX.

• Abnormal Market Conditions or Force Majeure AFEX reserves the right to close out some or all of your

open transactions between you and AFEX if an event occurs that is beyond your or our control, where such event either wholly or partially prevents, hinders, obstructs, delays or interferes with your or our ability to meet your obligations under the relevant contract.

• Operational Risks We are obligated to screen our clients and transactions

for risks of money laundering, terrorist financing and fraud. There is a risk that your transaction may be delayed or cancelled due to internal AFEX processes, people, or systems that have been put in place for these screening purposes. Our banking partners also adhere to similar processes which may also delay or cancel your transaction without notice. If your transaction is delayed or cancelled, we will do our best to inform you (where legally possible) and advise you accordingly.

How to Open an Account with AFEX

You are required to complete an:• Account Application form;• EFT form (if applicable) and submit;• Supporting documentation (as indicated on the

application).

These forms and the supporting documentation must be completed, signed, and returned to us via email, facsimile, mail, or in person. Upon receipt of these documents AFEX will conduct an analysis process to approve you as a customer. This process is in line with our Know Your Customer (KYC) policies and procedures.



When Payment is Made

Clients need to make payments according to the details provided to you by AFEX (this may be contained in a document called trade confirmation) by 3.00pm AEST/ADST, in order to ensure that payments are sighted on the day the payment is made and value dates can therefore be honoured. Failure to do so will mean that value dates will be postponed accordingly and clients may be charged for the extension of the contract.

When purchasing a Vanilla Option or a Structured Option contract that has a Premium that is payable, you must deposit funds into AFEX’s account according to the details provided to you by AFEX (this may be contained in a document called a trade confirmation). You must make payment within 24 hours of receiving the relevant details or trade confirmation from us.

Funds will either be released to your nominated beneficiary’s bank account or issued as a Draft on the Value Date of the contract (or for Window Forward Contracts – on a Value Date nominated by you), pro-vided funds paid by you towards these contracts have cleared prior to the value date. Cleared

funds can appear in the nominated account from the day they were sent, through to up to 4 Business Days later. Delivery times are dependent on the currency that we are sending and any processing time on the part of the beneficiary’s bank. Exotic Currencies, and more remote beneficiary locations often result in longer periods (typically up to 4 Business Days) before the funds appear in the nominated account.

Upon termination of a contract, payment of the outstanding amounts is required within 24 hours of us providing you with information about the amount outstanding.

Cost of Foreign Exchange Transactions

The table below shows the fees and other costs that may be charged in relation to Foreign Exchange Transactions. The fees are displayed in Australian Dollars and New Zealand Dollars. You may be charged equivalent amounts in other currencies.

We reserve the right to reduce or waive these fees or costs at our sole discretion in relation to particular clients or particular Foreign Exchange Transactions.


To Foreign Country This fee is charged when you send an EFT in the

foreign country's currency. For example: Euros to

France.

AUD $25.00 NZD $35.00 Per drawdon or per transfer

Third Party Country This fee is charged when you send an EFT in

the foreign country in a currency other than their

currency. For example: USD to China.


AUD to Foreign Country This fee is charged when you send an EFT in AUD

to another country or to Australia.


Foreign Bank Draft This fee is charged when you request a draft in a

foreign currency.


Type of Service Fee Brief Description Max Amount How & When

Electronic Funds Transfer (EFT)



Foreign Draft Conversion

(payout by cheque)

This fee is charged when you request a conversion

of a draft and we pay you with a cheque. For

example: We convert a draft from Euros and make a

cheque payable to you in AUD.


Foreign Draft Conversion

(payout by wire)


of a draft and we pay you with a wire. For example:

We convert a draft from Euros and send a wire to

your account in AUD.


Incoming Foreign Wire

(payout by cheque)


of a wire and we pay you with a cheque. For

example: We convert a wire from Euros and make a

cheque payable to you in AUD. The fee charged for

this is actually higher.


Incoming Foreign Wire

(payout by wire)


of a wire and we pay you with a wire. For example:

We convert a wire from Euros and send a wire to

your account in AUD. The fee charged for this is

actually higher.


Stop Payment on

Foreign Draft

This fee is charged when you request a stop

payment on a foreign draft purchased from AFEX.

AUD $25.00 NZD $35.00 Per request

Wire Tracer (Standard) This fee is charged when you ask us to trace a wire. AUD $25.00 NZD $35.00 Per request

Amendment to EFT

Payment Instructions

This fee is charged when you change the payment

instructions on your EFT.


Invalid Wire Instructions

(Re-issue)

This fee is charged when you give us invalid

information and we have to re-issue the wire.


Copy of Cleared Foreign

Bank Draft

This fee is charged when you request a copy of a

Cleared Foreign Bank Draft.


Recall This fee is charged when you ask us to recall a

payment.


Returned ACH/Check This fee is charged when a debit is returned due to

insufficient funds.

AUD $25.00 NZD $35.00 Per returned ACH/Check

Costs of Contract

Extension (Rollover Costs)

This fee is charged when you do not pay for your

contract within the stipulated time and your contract

is extended to the expected date of payment.

Foreign Exchange Rate

adjusted adversely by

0.05% of the original

Foreign Exchange Rate per

calendar day

Reflected in the Foreign Exchange

Rate of the contract that replaces the

contract that was not paid for within the

stipulated time.



Incoming Drafts/Wires

Miscellaneous Fees


Other Ways We are Remunerated

We generate revenue by way of mark-up. The mark-up is the difference between the Interbank Market Exchange Rate that we are able to obtain and the exchange rate we offer to you. The mark-up that is charged is determined by the frequency of trading, availability of the currency you are buying or selling, market volatility, the value of the transaction, and volatility of Interest Rates Differentials. The mark-up is likely to be higher in times of higher volatility, smaller transactions, longer periods between purchase and Value Date, more rare currency pairs, and more volatile Interest Rate Differentials. Please review our current Financial Services Guide for more information about how we are remunerated. You can request a copy of this document free of charge by contacting us using the details on the cover page of this PDS.

The wholesale exchange rates and therefore the rates we are able to offer you are constantly in a state of fluctuation. Currencies of the world are traded on the open market all over the world at any given time of day or night. Hence they are subject to a variety of global economic factors including the economic law of supply and demand.

Our representatives are paid a salary plus a commission based on the revenue generated by your transaction. The size of the commission will depend on the volume or mark up on transactions conducted by the representative, plus general team and company performance.

We may pay a referral commission to companies that refer business to us. If a commission is payable, it will be calculated according to the volume or mark up on the transaction(s).

Confirmation of Foreign Exchange Transactions

Your Account Executive will send you a receipt for each Foreign Exchange Transaction you place with us. Please ensure that you verify the information contained on the receipt. If there is a discrepancy contact your Account Executive on the day of transaction. If we do not hear from you before 3.00pm of the follow ing Business Day we will proceed as instructed and you will be bound by the information we have provided to you (which may include a document called a trade confirmation).

Taxation

Using our products can create tax implications. Generally, if you make a gain attributable to a foreign currency exchange rate fluctuation, then that part of the gain is included in your assessable income. Conversely, if you make a loss attributable to a foreign currency exchange rate fluctuation,

then that part of the loss is deducted from your assessable income.

However, the taxation laws are complex and vary depending on your personal circumstances and the purpose of your transactions. Accordingly, you should discuss any taxation questions you may have with your tax adviser before using our products or services.

Disputes

You should address any dispute relating to our products to your Account Executive. If we are unable to resolve the dispute internally we will automatically forward it to our complaints handling officer. If you are not satisfied with the resolution you may refer your dispute to:

The Financial Ombudsman Service LtdGPO Box 3Melbourne VIC 3001

Tel: 1300 78 08 08Fax: (03) 9613 6399Web: www.fos.org.au



Privacy Statement

AFEX collects personal information about you so that it can provide the products described in this PDS to you, and so that it can operate its business. Also, some laws require us to collect and hold personal information. These requirements include (but are not limited to) requirements set out in the Corporations Act 2001 and associated regulations, and the Anti-Money Laundering & Counter Terrorism Financing Act 2006 and associated rules. AFEX does not disclose any non-public personal or financial information about its customers to third parties, except as permitted by law and as necessary in processing and conducting the transaction you have requested and authorised. Third parties that we may need to disclosure your information to in order to meet these purposes include banks, compliance consultants and government bodies. You can access any personal information that we have about you, upon request. If you don’t provide information to us that we request, we may be unable to provide or continue providing, services to you. You can contact us to request a free copy of our full Privacy Policy.

GlossaryAFEX - Associated Foreign Exchange Australia Pty Ltd.

AFSL - Australian Financial Service Licence.

AUD - Australian Dollar.

Account Executive - The primary point of contact assigned to you or your business, if you are a client of AFEX. Account Executives are our employees, and will act on our behalf as the issuer of the products described in this PDS.

Barrier Level - A pre-determined Foreign Exchange Rate which, if triggered, will result in another event occurring (such as, in the case of a Forward Extra Option, requiring you to trade at the Worst Case Rate).

Barrier Period - The period commencing at 03:00 pm Tokyo time on the relevant contract’s agreed barrier start date and ending at the Expiry Time on the contract’s agreed barrier end date, which can be:-

i) The entire life of the relevant Structured Option contractii) A portion of the life of the relevant Structured Option contractiii) At 3.00pm Tokyo time on the Expiry Date of the relevant

Structured Option contract

Best Case Rate - This is the pre-determined Foreign Exchange Rate that is agreed to in certain Foreign Exchange Options that you will be obliged to use in conducting a Foreign Exchange Transaction if certain conditions are met.

Budget Rate - This is the pre-determined Foreign Exchange Rate that is agreed to in certain Structured Options that you will be obliged to use in conducting a Foreign Exchange Transaction if certain conditions are met.

Business Day - a day on which banks are open for general banking business in all jurisdictions involved in a Foreign Exchange Transaction, including the jurisdiction of each of the currencies involved in the Foreign Exchange Transaction.

Call Option - A Vanilla Option to buy one currency at a pre-determined price within a pre-determined time frame.

Collar Option - A Structured Option which allows you to protect against the risk that the Spot Rate will be less favourable than a nominated Worst Case Rate. It also gives you the ability to participate in favourable movements in the spot market between your Worst Case Rate and a pre-determined Best Case Rate.

Deal Rate - An option specific term referring to the Foreign Exchange Rate that you would be trading at if the Option or Structured Option contract you had entered into expired on that day.

Draft - A cheque or other negotiable instrument made out in a specified single currency. A Draft is similar to a personal cheque which can be used to make payments. An AFEX Draft also allows you to make a payment in a foreign currency.

Delivery Date - The date (being 2 Business Days after the Expiry Date) that the money physically settles in your account, our account and/or the beneficiaries account for a Vanilla Option or Structured Option.

Exotic Currency - Exotic currencies are typically issued by developing countries or small, emerging economies in the Asia Pacific regions, the Middle East, South America or Africa. Common characteristics are illiquidity, wide trading bands and high volatility. You will be notified by your Account Executive if a currency you are purchasing is an Exotic Currency.

Expiry Date – The date that a Foreign Exchange Transaction expires.

Expiry Time – Also referred to as “cut-off time”, this is the time on the Expiry Date at which the Foreign Exchange Transaction expires. We use the cut-off time of 3 P.M. in Tokyo (UTC/GMT +9), unless we state otherwise.

Foreign Exchange - The conversion of one currency to another at an agreed upon Foreign Exchange Rate.

Foreign Exchange Rate - The price of one currency (base currency) in terms of another currency (foreign currency). For example the Foreign Exchange Rate AUD/USD .6285 means one Australian dollar (base currency) is equal to 62.85 US cents (foreign currency) after taking into account AFEX’s own profit mark-up.

Foreign Exchange Transaction – An agreement between you and us to exchange different currencies at an agreed Foreign Exchange Rate, and includes Spot Value Contracts, Value Today Contracts, Value Tomorrow Contracts, Outright Forward Contracts, Window Forward Contracts, Vanilla Options and Structured Options.

Forward Extra Option – A Structured Option which provides a



guaranteed Worst Case Rate and also allows you to fully participate in favourable exchange rate movements, provided the currency pair has not traded at or above a pre-specified Barrier Level.

Forward Points – The difference between the Foreign Exchange Rates of a Spot Value Contract and foreign exchange contracts of other Value Dates - calculated using the interbank interest rates of the currencies involved in the Foreign Exchange Transaction. Forward points can be negative or positive depending on those prevailing interbank interest rates.

GBP – British Pound Sterling.

Interbank Market Exchange Rate - The rate at which top-level banks exchange currencies between each other.

Interest Rate Differentials – A factor used in calculating a Foreign Exchange Rate for a Forward Contract, which involves looking at the difference in interest rates between the base currency and the foreign currency.

Issuer – AFEX.

Knock-Out Forward - A Structured Option that provides a potential enhanced Strike Rate for future exchange requirements. However, if the Spot Rate breaches the pre-determined Knock-Out Level at any time during the Knock-Out Period, the trade ceases to exist and there are no obligations on either party.

Knock-Out Forward Extra - A Structured Option that provides a potential enhanced Strike Rate for future exchange requirements with the opportunity to participate in favourable exchange rate movements, provided the currency pair has not breached a pre-specified Barrier Level during the Barrier Period. If the Barrier Level has been breached at any time during the Barrier Period, you will be obliged to trade the full Notional Amount at the known Strike Rate. Furthermore, if the Spot Rate breaches the pre-determined Knock-Out Level at any time during the Knock-Out Period, the trade ceases to exist and there are no obligations on either party.

Knock-Out Level – A pre-determined Foreign Exchange Rate which, if triggered, will result in the trade ceasing to exist and neither party having obligations.

Knock-Out Period - The period commencing at the execution of the relevant contract and ending at the Expiry Time on the contract’s agreed end date.

Knock-Out Ratio Forward - A Structured Option that provides a potential enhanced Strike Rate for future exchange requirements. The amount you may be required to exchange is dependent upon where the Spot Rate is on expiry. Furthermore, if the market level breaches the pre-determined Knock-Out Level at any time during the Knock-Out Period, the trade ceases to exist and there are no obligations on either party.

Knock-Out Ratio Forward Extra - A Structured Option that provides a potential enhanced Strike Rate for future exchange requirements with the opportunity to participate in favourable exchange rate movements, provided the currency pair has not breached a pre-specified Barrier Level. If the Barrier Level is breached at any time during the Barrier Period, then you will be required to exchange the Ratio Amount at the Strike Rate. However,

if the Knock-Out Level is breached the trade ceases to exist, there are no obligations on either party and you are unhedged.

Margin Amount Additional Partial Prepayment – An amount of money, also known as a margin deposit or a margin call, that we may require from you if you have an open Foreign Exchange Transaction and we consider that your position is exposing us to risk. For example, if the Foreign Exchange Rate of one or more of your contract is 10 per cent less favourable than the prevailing Spot Exchange Rate or Foreign Exchange Rate, we may ask you to pay a Margin Amount an Additional Partial Prepayment.

Notional Amount – A pre-agreed amount in a Foreign Exchange Transaction that you may be obliged to transact at, if certain conditions are met.

Outright Forward Contracts - A Foreign Exchange Transaction by which you exchange one currency for another at a specified and agreed Foreign Exchange Rate for a Value Date between three Business Days and one year after the Trade Date and having a fixed future date as the Value Date.

Participating Forward Option – A Structured Option that allows you to set a Worst Case Rate but also gives you an opportunity to profit if the Foreign Exchange Rate moves higher than the Worst Case Rate, by giving you the option to trade some of your contract value at the higher and more favourable Spot Rate.

PDS – Product Disclosure Statement.

Premium – A non-refundable fee that you pay if you purchase a Vanilla Option or a Structured Option (unless it is described as “zero cost’) from us. The Premium is payable regardless of whether you exercise the option.

Protection Rate - The pre-determined Foreign Exchange Rate that is agreed to in certain Foreign Exchange Transactions that you will be obliged to use in conducting a Foreign Exchange Transaction if certain conditions are met.

Put Option – A Vanilla Option allowing the buyer to sell one currency at a pre-determined price within a pre-determined time frame.

Ratio Amount – A pre-agreed amount in a Structured Option that you may be obliged to transact at, if certain conditions are met.

Ratio Forward – A Structured Option that provides a potential enhanced Strike Rate for future exchange requirements which is better than the prevailing Forward Rate. The amount you may be required to exchange is dependent upon where the Spot Rate is on expiry.

Ratio Forward Extra - A Structured Option that provides a potential enhanced Strike Rate for future exchange requirements with the opportunity to participate in favourable exchange rate movements, provided the currency pair has not breached a pre-specified Barrier Level. If the Barrier Level is breached at any time during the Barrier Period, then you will be required to exchange the Ratio Amount at the Strike Rate.

Spot Exchange Rate – The exchange rate taken from the Interbank Market Exchange Rate which includes AFEX’s own profit mark-up for settlement on a Value Date up to two Business Days from the date the transaction was entered.



Spot Value Contract – A Foreign Exchange Transaction which is an agreement between you and us to exchange one currency for another at an agreed Foreign Exchange Rate and the currency is delivered to you or your nominated beneficiary typically within 2 Business Days (this is known as T+2) after the Trade Date.

Spot Value Date - A day that is two Business Days after the Trade Date for a Spot Value Contract.

Strike Rate – The fixed price at which the buyer of a Vanilla Option has the right to purchase or sell a currency and the seller of a Vanilla Option has the obligation to sell or purchase the currency. It is applicable to Structured Options to the extent that a Vanilla Otion has been included in the combination of foreign exchange products.

Structured Option – A combination of foreign exchange products that are bundled together and could include options that are bought, sold, or both. Generally, if you sell an option contract, you are entitled to an amount of money for that sale. If you buy an option contract, you are obliged to pay an amount of money for that purchase. Accordingly, some Structured Options are “zero cost” because you are buying and selling option contracts and the costs and benefits cancel each other out.

Trade Date - The date on which you order a Foreign Exchange Transaction.

USD – United States Dollar.

Value Date – The date that the currency you have purchased physically settles in your account, or your beneficiaries account for Spot Contracts, Value Today Contracts, Value Tomorrow Contracts, Outright Forward Contracts or a date you have specified for

individual draw downs on Window Forward Contracts.

Value Today Contracts - A Foreign Exchange Transaction to exchange different currencies at a specified and agreed foreign exchange rate on the same day as the Trade Date.

Value Tomorrow Contracts - A Foreign Exchange Transaction to exchange different currencies at a specified and agreed foreign exchange rate 1 Business Day after the Trade Date.

Vanilla Option - A Foreign Exchange Transaction that gives the buyer the right but not the obligation to exchange one currency for another at a pre-determined rate for a pre-determined price.

Window Forward Contracts - A Foreign Exchange Transaction by which you exchange one currency for another at a specified and agreed Foreign Exchange Rate for a Value Date between three Business Days and one year after the Trade Date and which allows you to access your foreign currency at any time within the Window Period.

Window Period - The period during which you may elect an earlier settlement date for all or parts of the contract for a Window Forward Contract.

Worst Case Rate – The pre-determined Foreign Exchange Rate that is agreed to in certain Structured Options that you will be obliged to use in conducting a Foreign Exchange Transaction if certain conditions occur.


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