Common use of Exchange Traded Commodities Clause in Contracts

Exchange Traded Commodities. Exchanged Traded Commodities (“ETC”s) are listed securities designed to provide investors with exposure to commodities or commodity price benchmarks. They are structured to behave like funds, but technically they are debt securities issued by Special Purpose Vehicles (“SPVs”), like an asset-backed security, as the notes are fully backed. Hence, they are especially exposed to the credit worthiness of the issuer and, if indirect replicating, the swap counterparty (ETCs are designed to minimize counterparty risk, either through the purchase of physical assets or via the posting of collateral with an independent third party). ETCs trade intraday on regulated stock exchanges. They enable investors to gain exposure to single commodities such as gold, silver and oil, without trading futures contracts or taking physical delivery of commodities. Thus, they are free from margin requirements or contingent liabilities associated with futures investing. It is important to understand that whereas ETFs are collective funds (UCITS), ETCs are not regulated like funds, e.g. they are not UCITS compliant. An UCITS ETFs cannot track single commodities or commodity baskets but an ETC enable investors to gain exposure to commodities without trading commodity futures contracts themselves or taking physical delivery of commodities. The risks associated with investing in ETC include but not limited to:-  The risk of loss in trading commodities can be substantial. The price of commodities (e.g. raw industrial materials such as gold, silver and oil) may be subject to substantial fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. Additionally, valuations of commodities may be susceptible to such adverse global economic, political or regulatory developments.  Investors in certain products linked to a commodity should be prepared and able to sustain losses of the capital invested, up to a total loss as detailed in the product. The value of an investment in the ETC may go down as well as up and past performance of the underlying commodity is not a reliable indicator of future performance.  The holder of the ETC will be exposed to the credit risk of the Issuer.  Liquidity Risk: Although the Issuer will use reasonable efforts to quote bid and offer prices (subject to internal policy and applicable laws and regulations), the liquidity of the investments may be limited.  The investment does not generate a regular income and investors will not receive dividends, which they would otherwise receive if they invested in the Index directly.  Currency Risk is the risk that the profit or loss from Transactions in foreign currencies will be affected by fluctuations in currency exchange rates where there is a need to convert from the currency denomination of the Transaction to another currency.  The structure and cost of an ETC means it may not track its underlying commodity exactly.

Exchange Traded Commodities. Exchanged Traded Commodities (“ETC”s) are listed securities designed to provide investors with exposure to commodities or commodity price benchmarks. They are structured to behave like funds, but technically they are debt securities issued by Special Purpose Vehicles (“SPVs”), like an asset-backed security, as the notes are fully backed. Hence, they are especially exposed to the credit worthiness of the issuer and, if indirect replicating, the swap counterparty (ETCs are designed to minimize counterparty risk, either through the purchase of physical assets or via the posting of collateral with an independent third party). ETCs trade intraday on regulated stock exchanges. They enable investors to gain exposure to single commodities such as gold, silver and oil, without trading futures contracts or taking physical delivery of commodities. Thus, they are free from margin requirements or contingent liabilities associated with futures investing. It is important to understand that whereas ETFs are collective funds typically regulated Collective Investment Schemes (e.g. UCITS), ETCs are not regulated like funds, e.g. they are not UCITS compliant. An A UCITS ETFs cannot track single commodities or commodity baskets but an ETC enable enables investors to gain exposure to commodities without trading commodity futures contracts themselves or taking physical delivery of commodities. The risks associated with investing in ETC ETCs include but not limited to:-  The risk of loss in trading commodities can be substantial. The price of commodities (e.g. raw industrial materials such as gold, silver and oil) may be subject to substantial fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. Additionally, valuations of commodities may be susceptible to such adverse global economic, political or regulatory developments.  Investors in certain products linked to a commodity should be prepared and able to sustain losses of the capital invested, up to a total loss as detailed in the product. The value of an investment in the ETC may go down as well as up and past performance of the underlying commodity is not a reliable indicator of future performance.  The holder of the ETC will be exposed to the credit risk of the Issuer.  Liquidity Risk: Although the Issuer will use reasonable efforts to quote bid and offer prices (subject to internal policy and applicable laws and regulations), the liquidity of the investments may be limited.  The investment does not generate a regular income and investors will not receive dividends, which they would otherwise receive if they invested in the Index directly.  Currency Risk is the risk that the profit or loss from Transactions in foreign currencies will be affected by fluctuations in currency exchange rates where there is a need to convert from the currency denomination of the Transaction to another currency.  The structure and cost of an ETC means it may not track its underlying commodity exactly.

Exchange Traded Commodities. Exchanged Traded Commodities (“ETC”s) are listed securities designed to provide investors with exposure to commodities or commodity price benchmarks. They are structured to behave like funds, but technically they are debt securities issued by Special Purpose Vehicles (“SPVs”), like an asset-backed security, as the notes are fully backed. Hence, they are especially exposed to the credit worthiness of the issuer and, if indirect replicating, the swap counterparty (ETCs are designed to minimize counterparty risk, either through the purchase of physical assets or via the posting of collateral with an independent third party). ETCs trade intraday on regulated stock exchanges. They enable investors to gain exposure to single commodities such as gold, silver and oil, without trading futures contracts or taking physical delivery of commodities. Thus, they are free from margin requirements or contingent liabilities associated with futures investing. It is important to understand that whereas ETFs are collective funds (UCITS), ETCs are not regulated like funds, e.g. they are not UCITS compliant. An UCITS ETFs cannot track single commodities or commodity baskets but an ETC enable investors to gain exposure to commodities without trading commodity futures contracts themselves or taking physical delivery of commodities. The risks associated with investing in ETC include but not limited to:-  − The risk of loss in trading commodities can be substantial. The price of commodities (e.g. raw industrial materials such as gold, silver and oil) may be subject to substantial fluctuations over short periods of time and may be affected by unpredicted international monetary and political policies. Additionally, valuations of commodities may be susceptible to such adverse global economic, political or regulatory developments.  − Investors in certain products linked to a commodity should be prepared and able to sustain losses of the capital invested, up to a total loss as detailed in the product. The value of an investment in the ETC may go down as well as up and past performance of the underlying commodity is not a reliable indicator of future performance.  − The holder of the ETC will be exposed to the credit risk of the Issuer.  Liquidity Risk: Although the Issuer will use reasonable efforts to quote bid and offer prices (subject to internal policy and applicable laws and regulations), the liquidity of the investments may be limited.  The investment does not generate a regular income and investors will not receive dividends, which they would otherwise receive if they invested in the Index directly.  Currency Risk is the risk that the profit or loss from Transactions in foreign currencies will be affected by fluctuations in currency exchange rates where there is a need to convert from the currency denomination of the Transaction to another currency.  The structure and cost of an ETC means it may not track its underlying commodity exactly.