DDO REQUIREMENT | APPLICATION TO THE CREDIT FACILITY |
Class of retail clients that comprise the target market for this product – s 994B(5)(b) |
1. Description of the likely objectives, financial situation and needs of consumers in the target market | Background Tiger Brokers (AU) Pty Limited (“TBAU”) is an online broker that provides financial product trading services to retail and wholesale clients. We are authorized and regulated by the Australian Securities and Investments Commission (ASIC), with license number 300767 and business office located at Suite 28.01, 25 Bligh Street Sydney, NSW 2000. The DDO aims to assist Clients to obtain appropriate financial products by requiring product issuers and distributors to have a consumer- centric approach to the design and distribution of financial products. Target Market The credit facility is suitable when: Clients are engaging or proposing to engage in trading financial products on TBAU’s platform; Clients wish to make use of the unsettled cash balance due from recent trades (ie trades which have been placed but where the clients have not yet received the trade proceeds)as part of the trading limit to initiate the subsequent trades; Clients will have insufficient settled cash balance to meet the settlement obligations of the subsequent trades placed; The settlement of the subsequent trades precedes the settlement of the recent trades; and Clients wish to obtain short-term credit (up to 2 business days) to be able to meet the settlement obligation of the subsequent trades, up to the amount of unsettled cash balance.
Clients must also meet the following conditions: Clients who are above the age of 18; Clients who have opened the trading account with TBAU; Clients who understand the market opportunities, the nature and the risk of the products intended to trade; and Clients who understand the nature and the mechanism of the credit facility.
Likely purposes and objectives Clients who satisfy the above criteria and wish to use the credit facility are likely to do so for following purposes: Likely liquidity needs Likely financial situations Investment timeframe Considering the settlement terms of the financial products offered by TBAU are within the time frame of T+2, the term of the credit generally has a maximum duration of two (2) business days, with majority of instances of use in practice being one (1) business day. Retail clients for whom our products are unsuitable The credit facility is generally unsuitable for the following classes of retail clients Clients who are natural persons below the age of 18; Clients who are unable to meet TBAU’s account opening criteria; Clients who do not understand the market opportunities, the nature and the risk of the products intended to trade; Clients who do not understand the nature and the mechanism of the credit facility; Clients who will have sufficient settled cash balance to meet the trades’ settlement obligation; or Clients who have insufficient purchasing power, determined by the sum of settled cash balance and the unsettled cash balance in the account, to initiate the intended trades.
|
2. Description of the credit facility (including its key attributes) | The credit facility provided by TBAU assists clients in meeting their settlement obligations arising from the trading activities, if they have sufficient unsettled cash from recent transactions. The trading limit, which is the maximum purchasing power available to accountholders for placing the trades, is determined by the sum of the settled cash balance and the unsettled cash balance in the account. The credit facility becomes relevant when the unsettled cash balance is utilized to initiate the trades but the settlement of which precedes the settlement of the unsettled cash balance. A typical scenario is when a client conducts a currency exchange transaction to convert AUD to USD, settling on T+2, and places a US stock trade with a settlement term of T+1 on the same day. The unsettled USD proceeds from the currency exchange transaction is considered as part of the purchasing power when placing the US stock trades. If the client lacks sufficient settled USD cash balance to meet the trade’s settlement on T+1, the credit will be provided in the necessary currency to the client to cover the shortfall in settled USD cash balance to prevent the client from default. TBAU will deduct the corresponding cash balance from the client’s account upon the settlement of the unsettled cash. Key attributes: Deferred payment arrangement for investment purposes: credit provided to client is an arrangement under which client’s obligation to pay money owed to TBAU is deferred by up to two (2) business days. Enhanced purchasing power: By extending credits to cover client’s settlement obligations, clients can rely on the unsettled cash balance to place a trade up to the trading limit which is calculated using the sum of a client's settled cash and unsettled cash. This feature can be particularly beneficial given the varying settlement terms among financial products. Short duration: Considering the settlement terms of the financial products offered by TBAU are within the timeframe of T+2, the term of the credit has a maximum duration of two (2) business days, with majority of instances of use in practice being one (1) business day. Current Absence of Charges: TBAU currently does not impose any interest or fees related to the provision of the credit facility, providing clients with financial flexibility without additional costs. Credit currency and limit: the credit is issued in the currency of the trades for settlement, with the amount equaling to the settlement obligation not fulfilled by the settled cash balance. The credit limit for a particular currency at a point in time is capped at the balance of the unsettled cash in that currency. Limited marginal risk exposure: during the course of financial products trading, the risk arising from the credit provided to client may be limited. The credit limit for a specific currency at any given time is capped at the balance of the unsettled cash in that currency. Typically, the unsettled cash balance arises from the sales of listed products and the execution of spot FX contracts where TBAU serves as both the issuer and counterparty. Due to this arrangement, the risk of not receiving the proceeds from the settlement of unsettled cash balance is very low. And consequently, the risk of a client failing to repay is very low, if any.
|
3. Explanation of why the credit facility, including its key attributes, is likely to be consistent with the likely objectives, financial situation and needs of consumers in the target market | Meeting client’s likely purpose and objectives: the credit facility helps clients to meet the settlement obligation so client can avoid the miss of the trading opportunities due to varying settlement terms of different financial products traded. The deferred payment arrangements defer the client’s obligations to pay money owed to TBAU for future trades until the unsettled cash balance from recent trades is settled. Meeting client’s likely liquidity needs: Considering the settlement terms of the financial products offered by TBAU are within the time frame of T+2, the term of the credit generally has a maximum duration of two (2) business days, with majority of instances of use in practice being one (1) business day. Meeting client’s likely financial situations: By extending credits to cover client’s settlement obligations, clients can rely on the unsettled cash balance to place a trade up to the trading limit which considers both settled cash and unsettled cash. This feature can be particularly beneficial given the varying settlement terms among financial products.
|
Conditions and restrictions relating to the distribution of this product – s 994B(5)(c) |
4. Outline of the conditions and restrictions relating to distribution of the credit facility | The credit facility is distributed and made available by TBAU to its clients during their course of trading other financial products on TBAU’s trading platform. The 3rd party distributors who may be involved in the distribution of the products, including various introducing brokers (each a Distributor, and together, the Distributors) have a limited role in distributing the product by only allowed to advertise the availability of the product. TBAU has a high degree of control over the distribution of the credit facility. The credit facility is offered to clients who have opened accounts with TBAU and meet all the specified target market criteria. Importantly, the credit facility is not offered as a standalone financial product; instead, it is provided to clients only through their engagement in trading other financial products on the TBAU platform. It is only made available when applicable situations arise during clients' trading activities or proposed engagements. TBAU requires that all Distributors seek approval from TBAU prior to publishing any marketing material related to the credit facility. The credit facility is typically not promoted independently but rather as a supplementary offering alongside other financial products. Marketing messages are primarily focused on informing recipients about the availability of this additional feature within TBAU's product offerings. The emphasis is placed on providing clients with relevant information regarding the availability of the credit facility, rather than promoting it as a standalone product. TBAU will also seek regular statements and data from Distributors to ensure that the Distributors are complying with the requirement to distribute TBAU’s credit facility only to persons likely within the target market.
|
5. Explanation of why these distribution conditions and restrictions will make it more likely that the consumers who acquire the credit facility are in the target market | TBAU considers the distribution conditions and restrictions support TBAU’s assessment that the product will likely be distributed to the target market because of the following controls: The credit facility is issued and finalized by TBAU, not distributors. During the onboarding processes, clients are required to declare that they have read and understand the TMD and client agreement governing the terms and conditions of the credit facility, along with other disclosure documents. Ongoing training is provided to the client facing staff who may provide technical support and answer clients’ questions regarding the credit facility. All marketing material and campaigns require appropriate approval prior to publication, which is to ensure it does not contain elements which may attract potential clients outside of the target market. Implementing contractual requirements to the effect of the conditions outlined above ensures that the credit facility is only distributed by distributors in permissible ways to persons that are likely to satisfy the target market. TBAU will regularly monitor the performance of distributors in complying with this distribution condition.
|
Reviews |
6. Outline of the events and circumstances that would reasonably indicate to TBAU that the TMD for the credit facility is no longer appropriate (i.e. "review triggers" – s 994B(5)(d) | Review Triggers when: There are significant dealings in issuing the credit facility, which are not consistent with the target market or this TMD. This trigger occurs where significant distribution is occurring outside the target market, and does not refer to any one particular dealing in the credit facility. The distributor has reported a large volume of complaints related to the credit facility. TBAU has received a large volume of complaints in relation to the credit facility, indicating that the nature, mechanism and/or intended use of the credit facility are not well understood. Significant compensation paid out in relation to the credit facility. TBAU has detected significant issues with the distribution of the credit facility through monitoring of our day-to-day activities, or the monitoring and supervision of our Distributors. Material changes to key attributes listed in section 2 above. Key attributes have not performed as disclosed by a material degree and for a material period. The use of Product Intervention Powers, regulator orders or directions that affects the product.
|
7. The period of time between the start of the day this TMD is made and the day that the first periodic review of the TMD will conclude – s 994B(5)(e) | The first periodic review of this TMD will occur in January 2025. |
8. The period of time between the conclusion of a periodic review of the TMD and the start of the next periodic review – s 994B(5)(f) | TBAU will review the appropriateness of its target market on an annual basis |
Reporting period for reporting information about the number of complaints about the product – s 994B(5)(g) |
9. The reporting period in which the distributors of TBAU's financial products are required to provide information about the number of complaints received about the product | TBAU will require that Distributors report information about the number and nature of complaints received about the product and whether any persons not in the target market were distributed the credit facility, within 10 business days after the end of each quarter. |
Information Sharing |
10. Outline of the kinds of information that TBAU will require from distributors to promptly identify that the TMD for the credit facility is no longer appropriate – s 994B(5)(h) | Complaint: the number, nature, resolution and compensation of complaints about the credit facility Feedback: client feedback about the credit facility and / or the target market Significant dealings: details and reasons why they are considered as the significant dealings; how they are identified steps taken or to be taken to persons affected steps taken or to be taken to stop it happening again
|
11. The distributors that will be required to provide the information specified above – s 994B(5)(h)(i) | TBAU will require all of the above data from all Distributors. No party may engage in the distribution of TBAU’s credit facility unless they have entered into a service level agreement with us. |
12. The reporting period for the relevant distributors to provide the information specified above – s 994B(5)(h)(ii) | Complaint: Quarterly Feedback: Quarterly Significant dealing: as soon as practicable and in any event within 10 business days after becoming aware. |