CONFIDENTIAL OFFERING MEMORANDUM. February 2008

Transcription

1

2 CONFIDENTIAL OFFERING MEMORANDUM CMC MARKETS CANADA INC. AGENT FOR CMC MARKETS UK PLC February 2008 Private Placement of Securities in Ontario, Quebec, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia and Prince Edward Island Contracts for Differences Series Issued by CMC Markets UK Plc This Confidential Offering Memorandum (this Memorandum ) constitutes an offering of these securities only in those jurisdictions where they may be lawfully offered for sale and therein only by persons permitted to sell such securities and to those persons to whom they may be lawfully offered for sale. This Memorandum is not, and under no circumstances is to be construed as, an advertisement or a public offering of the securities referred to herein. No securities commission or similar authority in Canada or elsewhere has reviewed or in any way passed upon this document or the merits of the securities described herein and any representation to the contrary is an offence. This Memorandum is confidential and by their acceptance of it prospective investors agree that they will not transmit, reproduce or make it or any information contained or incorporated by reference in it available to any other person or company or use it for any purpose other than determining whether or not to make an investment in the securities described herein. The following disclosure applies to customers of CMC Markets Canada Inc. Each customer of CMC Markets Canada Inc. hereby acknowledges having been provided with a copy of the Statement of Policies of CMC Markets Canada Inc.. 2

3 TABLE OF CONTENTS SECTION 1 - OFFERING MEMORANDUM INTRODUCTION...4 THE CONTRACTS FOR DIFFERENCES...5 RISKS...6 DISTRIBUTION OF CFDS...8 METHOD OF DISTRIBUTION...9 PRODUCT SELECTION...9 NON-FIXED PRICE OFFERINGS...9 INTER-CORPORATE RELATIONSHIPS...9 FEES...10 INSIDER TRADING / TRADING ON MATERIAL, NON-PUBLIC INFORMATION...10 RESALE RESTRICTIONS...10 REPRESENTATION AND AGREEMENT BY THE INVESTORS...11 PROCEEDS OF CRIME (ANTI-MONEY LAUNDERING) LEGISLATION...12 PERSONAL INFORMATION LAWS...12 STATUTORY RIGHTS OF ACTION...13 ENFORCEMENT OF LEGAL RIGHTS...19 TAXATION AND ELIGIBILITY FOR INVESTMENT...19 CONFLICTS OF INTEREST...19 CMC MARKETS CANADA INC STATEMENT OF POLICIES CONCERNING CONFLICTS OF INTEREST WITH RELATED ISSUERS AND CONNECTED ISSUERS...20 CONTACT DETAILS: CMC MARKETS CANADA INC

4 CONFIDENTIAL OFFERING MEMORANDUM (ONTARIO, QUEBEC, BRITISH COLUMBIA, ALBERTA, SASKATCHEWAN, MANITOBA, NEW BRUNSWICK, NOVA SCOTIA AND PRINCE EDWARD ISLAND) INTRODUCTION The securities being offered hereunder are Contracts for Difference ( CFDs ) issued by CMC Markets UK Plc ( CMC ) via the Marketmaker Trading Platform (the CMC Trading Platform ) and the CFDs are distributed in Canada by CMC Markets Canada Inc. ( CMC Markets ), as dealer and agent of CMC. The following documents are incorporated by reference herein and form part of this Confidential Offering Memorandum (this Memorandum ): Terms and Conditions for Canadian Customers (the Canadian Terms and Conditions ), as may be amended from time to time; The listing of the various CFDs being offered as listed on CMC Markets website at (the CFD List ); and CMC s Terms of Business (the Terms of Business ), as may be amended from time to time, which includes the Risk Warning Notice, Rates Schedule and Execution Policy referenced therein. The Canadian Terms and Conditions, the CFD List and the Terms of Business (including documents reference therein) are available on CMC Markets website at Please be advised that CMC Markets and CMC reserve the right to add, delete or alter any CFD offering at any time. Potential investors are instructed to read and fully understand this Memorandum, including the Canadian Terms and Conditions and the Terms of Business prior to submitting their trading application form (the Application Form ) to CMC Markets. A potential investor should not sign the Application Form if they are unsure as to the effects of this Memorandum or the nature of the risks involved. If a potential investor completes, signs and submits the Application Form to CMC Markets, then they are acknowledging to both CMC and CMC Markets that they have read the documents supplied to them in connection with this Memorandum and that they understand and agree that their relationship with CMC and CMC Markets will be governed by the terms and conditions set out in this Memorandum and the documents incorporated by reference. 4

5 No person or representative of CMC Markets or CMC has been authorized to give any information or to make any representations other than those contained herein. CMC Markets and its representatives provide no advice and make no recommendations regarding the CFDs of CMC. THE CONTRACTS FOR DIFFERENCES An investor in the CFDs must familiarise themselves with the nature of CFD trading, the terminology and the jargon used and the procedures involved before you enter into any CFDs. The CFD is a contract that closely follows the price movement of a notional underlying financial instrument (an "Underlying Instrument"), such as shares, indices, market sectors currencies and commodities. The CFD allows an investor to make a profit or loss based on the movement of the price of an Underlying Instrument without actually owning that Underlying Instrument. An investor is either entitled to be paid an amount of money or required to pay an amount of money, depending on the movement of the Underlying Instrument. In simple terms, the amount of any profit or loss made on a CFD is equal to the difference between the quoted price for a CFD in respect of a given quantity of the Underlying Instrument when the CFD is opened (assume a "long" position), and the quoted price for the CFD in respect of the same quantity of the Underlying Instrument (but then a "short" position) when the CFD is closed, less any applicable commissions. Although the CFD mirrors the price movement of an Underlying Instrument, the CFD does not confer the right or obligation to acquire or deliver the Underlying Instrument itself, and does not confer any other rights of shareholders of the Underlying Instrument, such as voting rights. The CFD does not entitle an investor to receive any dividends or other distributions which may be paid in respect of the Underlying Instrument to which the CFD relates. The CFD is issued "over-the-counter", which means that it cannot be traded through a stock exchange. Rather, the CFD is a private investment contract between an investor and CMC. 5

6 The CFDs are traded on "margin", which means that CFDs employ a high degree of leverage. The ability to leverage an investment is one of the principal features of CFDs, allowing investors to magnify profits or losses by reducing the initial capital outlay required to achieve the same market exposure obtained by investing directly in the Underlying Instrument. RISKS Investors must read the Risk Warning Notice and all the other documents supplied to them in connection with this Memorandum very carefully. There are substantial risks involved in investing in the CFDs, including those described in the Canadian Terms and Conditions, the Terms of Business and in particular, the Risk Warning Notice. These include market risks, extraordinary event risks, hedging risks, execution and technology risks, product risks, currency risks, legal risks, accounting risks, credit risks, foreign country risks, lack of regulatory oversight risks, leverage risks, and Canadian and non-canadian tax risks. Investment in the CFDs is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks inherent in an investment in the CFDs. No assurance can be given that investors will receive a return of their capital or any profit thereon. In making an investment decision, investors must rely on their own examination of the CFDs and the terms of the CFDs, including the merits and risks involved. Prospective investors should not construe the contents of this Memorandum as legal, tax, regulatory, investment, financial or accounting advice, and each prospective investor is urged to consult with its own advisors with respect to the legal, tax, regulatory, investment, financial, accounting and other consequences of an investment in the CFDs. The prices of derivative instruments such as the CFDs can be highly volatile. The CFDs are contracts for difference, which are securities that expose investors to the change in value of an underlying asset without having to purchase the underlying asset itself. In order to trade, the customer is required to place margin (the initial deposit made before trading). In this way, trading CFDs allows customers to leverage their investment significantly by paying only a fraction of the capital required in the cash market and still have full exposure to the price movement of the asset. This may work against, as well as for, the customer. 6

7 Investors can find the list of CFDs offered as of the date of this Memorandum on the CMC Markets website and on either the simulated or live trading platform of CMC provided via the CMC Trading Platform. Investors are advised that the information appearing on the CMC Markets web-site as well as the CMC Trading Platform is only available in the English language. Therefore, it is essential that investors have a fluent understanding of the English language. Investors without such fluency should not invest in CFDs. There are a number of things investors should understand before investing in the CFDs. Investors should confirm the terms and conditions of the specific CFD they are entering into (including margin requirements, expiry dates and any restrictions on exercise). Investors should, as well, familiarize themselves with the terms and conditions of the CFDs so that they fully understand their rights and obligations thereunder. Investors should calculate the extent to which the value of the underlying asset must increase for their position to become profitable, taking into account the imputed cost of the component and all transaction costs. The value of the CFDs may be influenced by a number of inter-related factors. The relationship among these factors is complex. Factors that can be expected to affect the value of CFDs include: the level of interest rates, the price or level of the underlying asset and the volatility of the underlying asset. Investors will also be exposed to risks which are specific to the underlying asset of the CFDs and investors should familiarize themselves with those risks prior to entering into the transaction. Transactions in CFDs can carry a high degree of risk. Certain strategies intended to reduce the risk of entering into a transaction in CFDs may not be effective because market conditions may make it impossible to implement the strategy. Strategies using combinations of positions may be as risky as taking simple long or short positions. Hedging transactions may require constant monitoring. A failure to adjust a hedging transaction in light of changing market conditions can result in the position becoming either unhedged or overhedged and losses can ensue. As noted in section 8.4 of the Canadian Terms and Conditions, the margin with respect to an investment in CFDs does not limit the investor s liability for losses. The investor must monitor its current positions and current and potential losses and may not rely on CMC Markets or CMC to do so. As noted in section 7.3 of the Canadian Terms and Conditions, this is true irrespective of any Stop Loss selected, and a Stop Loss is no guarantee that the CFD will be closed at that price or at all. In addition, a Sell at Market Order or a limited order is no guarantee that the CFD will be closed or entered into, as the case may be, at that price or at all. Guaranteed Stop Losses are available for a nominal fee and may be placed by telephone 7

8 only. Please contact a CMC Markets representative for more information on this service. While it seeks to do so, there can be no guarantee that CMC will be able to hedge its positions at all times, and thus investors are potentially exposed to the credit risk of CMC. Financial statements of CMC are available on CMC s website at under Company Overview and are available upon request. Trading via the CMC Trading Platform and/or CMC Markets results in the investor entering into a position only with CMC as a counter party. The CMC Trading Platform is not a marketplace that brings together the orders of multiple buyers and sellers and allows them to interact with each other, and is not a stock exchange, commodity futures exchange or other regulated marketplace. As a result, investors should note that rules designed to protect investors who purchase securities via a stock exchange or commodity futures exchange or other regulated marketplace will not apply to the CFDs. CFDs distributed to customers are non-transferable to third parties. Investments in CFDs are not insured by the Canadian Deposit Insurance Corporation. CMC Markets is a member of the Canadian Investor Protection Fund. CMC is not a member of the Canadian Investor Protection Fund. The foregoing discussion, together with the discussion in the Canadian Terms and Conditions and the Terms of Business, does not purport to be a complete explanation of all risks involved in purchasing CFDs. Potential investors should read this entire Memorandum and consult with their legal and other professional advisors before deciding to invest in CFDs. DISTRIBUTION OF CFDS CFDs are being offered to investors resident in Ontario, Quebec, British Columbia, Alberta, Saskatchewan, Manitoba, New Brunswick, Nova Scotia and Prince Edward Island (the Offering Jurisdictions ) on a private placement basis pursuant to certain exemptions from prospectus and registration requirements contained in applicable securities legislation in each such jurisdiction. CMC Markets is an investment dealer in Ontario and is a member of the Investment Dealers Association of Canada and a member of the Canadian Investment Protection Fund. 8

9 METHOD OF DISTRIBUTION The method of distribution for the CFDs is via the CMC Trading Platform (available on the Internet) or in limited circumstances via the telephone. This Memorandum, and other required documents, must be signed (or initialled) and returned to the Toronto, Ontario office of CMC Markets and margin money deposited with CMC Markets before any trading can occur. Subsequently, trades may be placed; risk is assumed by placing a trade. PRODUCT SELECTION Details of CFDs currently offered may be found on the CMC Trading Platform. The products and product attributes may change at any time. CMC and CMC Markets reserve the right to add, delete or alter any product at any time. NON-FIXED PRICE OFFERINGS All CFDs are offered on a revolving basis at non-fixed prices. Indicative prices are listed on the CMC Trading Platform at the time of transaction execution in the trading environment or can be quoted via the telephone. Prices offered are dependent upon the current underlying price and liquidity and may fluctuate without notice or constraint. INTER-CORPORATE RELATIONSHIPS CMC Markets is a corporation amalgamated under the laws of Canada with its principal office in Toronto, Ontario, and is a wholly-owned subsidiary of CMC. CMC Markets is registered as an investment dealer in Ontario. CMC is a company incorporated in England and Wales under the Companies Act 1985, and has its head and registered office is located at 66 Prescot Street, London, United Kingdom, E1 8HG. CMC commenced operations in 1989 as "Currency Management Consultants Ltd". CMC is a regulated financial services firm in the UK and is registered as a "Category A" firm with the Financial Services Authority (the "FSA"). CMC is an established execution-only online trading company offering CFDs and is the issuer of the CFDs. 9

10 FEES CMC Markets will charge a fee for each CFD traded. The amount of commission or brokerage fee received by CMC Markets will be reflected on each monthly statement issued by CMC Markets to the customer. A schedule of the current commission or brokerage fee charged by CMC Markets for CFD transactions executed by the customer is available on the CMC Markets website. Commission and other transaction fees can have a material adverse effect on an investor's market position and ability to break even and, therefore, ultimately effect profits and losses. In order to achieve a net profit on any transaction, the price received upon the sale of the market position must exceed the purchase price by at least the amount of commissions and other fees paid. Trading CFDs may involve frequent purchase and sale transactions, resulting in significant fees and commissions. INSIDER TRADING / TRADING ON MATERIAL, NON-PUBLIC INFORMATION Investors may not trade based on insider information or any data that is material and non-public. CMC Markets and CMC assume no legal responsibility to monitor the customer s access to such information and CMC Markets and CMC disclaim all and any repercussions resulting from said activities. RESALE RESTRICTIONS The distribution of the CFDs in the Offering Jurisdictions is being made on a private placement basis. CMC is not a reporting issuer in any province or territory in Canada, the CFDs are not listed on any stock exchange in Canada. CFDs distributed in the Offering Jurisdictions are not transferable to third parties. However, in the event that they were become transferable, any resale of the CFDs must be made in accordance with applicable securities laws, which may require resales to be made: in accordance with exemptions from registration and prospectus requirements, including those pertaining to resales outside Canada; or pursuant to a prior written consent order or ruling of the relevant securities regulatory authority; or (c) pursuant to a prospectus for which a final receipt is issued by the relevant securities regulatory authority. Investors are advised to seek legal advice prior to any resale of the CFDs. 10

11 REPRESENTATION AND AGREEMENT BY THE INVESTORS By investing in CFDs issued by CMC, each investor in Canada will be deemed to represent to both CMC and CMC Markets the following: i) Such investor is entitled under the securities legislation of the investor s province of residence to purchase the CFDs without the benefit of a prospectus qualified under the securities legislation of the investor s province of residence. ii) The investor is an accredited investor as that term is defined in National Instrument ( ). iii) The investor is purchasing the CFDs as principal. iv) The investor has been notified by CMC and CMC Markets that CMC is required to provide information ("personal information") pertaining to the investor as required to be disclosed in Schedule I of Form F1 (including its name, address, telephone number and the number and value of any CFDs purchased) which is required to be filed by CMC under ; that such personal information will be delivered to the applicable provincial securities regulatory authority in accordance with and therefore may become available to the public in accordance with the requirements of applicable laws; (c) that such personal information is being collected indirectly by the applicable provincial securities regulatory authority under the authority granted to it under the provincial securities legislation; (d) that such personal information is being collected for the purposes of the administration and enforcement of the securities legislation of each province; and (e) by purchasing CFDs, such investor has authorized the indirect collection of the personal information by the securities regulatory authorities. By purchasing CFDs, a purchaser acknowledges that personal information such as the investor s name, address and telephone number will be delivered to the Ontario Securities Commission (the OSC ) and that such personal information is being collected indirectly by the OSC under the authority granted to it in securities legislation for the purposes of the administration and enforcement of the securities legislation of the province of Ontario. By purchasing CFDs, an investor shall be deemed to have authorized such indirect collection of personal information by the OSC. Questions about such indirect collection of personal information should be directed to the OSC s Administrative Assistant to the Director of Corporate Finance, Suite 1903, Box 5520 Queen Street West, Toronto, Ontario M5H 3S8 or to the following telephone number: (416)

12 v) Such investor has reviewed and understands the contents of this Memorandum, including the Canadian Terms and Conditions and the Terms of Business. The above warranties and representations shall be deemed to be repeated each time the investor purchases a CFD. By virtue of the purchase of CFDs, each investor resident in Québec shall be deemed to have required that all documents relating thereto be drawn up in the English language only. En vertu de la souscription d actions offertes par le présent document, chaque actionnaire qui réside au Québec est réputé avoir requis que tous les documents s'y rattachant soient rédigés en anglais seulement. PROCEEDS OF CRIME (ANTI-MONEY LAUNDERING) LEGISLATION In order to comply with Canadian legislation aimed at the prevention of money laundering, CMC Markets may require additional information concerning investors. If, as a result of any information or other matter which comes to CMC Markets attention, any director, officer or employee of CMC Markets, or its professional advisors, knows or suspects that an investor is engaged in money laundering, such person is required to report such information or other matter to the Financial Transactions and Reports Analysis Centre of Canada and such report shall not be treated as a breach of any restriction upon the disclosure of information imposed by law or otherwise. PERSONAL INFORMATION LAWS The collection, use and disclosure of personal information about residents of Ontario, Saskatchewan, Manitoba, New Brunswick, Nova Scotia and Prince Edward Island is subject to Part 1 and Schedule 1 of the Personal Information Protection and Electronic Documents Act (Canada) ( PIPEDA ), and the collection, use and disclosure of personal information about residents of British Columbia, Alberta or Quebec is subject to the Personal Information Protection Act (British Columbia), the Personal Information Protection Act (Alberta) or an Act respecting the protection of personal information in the private sector (Quebec), as the case may be, and may also be subject to PIPEDA. 12

13 A description of the purposes of such collection, use and disclosure is provided in the Canadian Terms and Conditions which form part of the Terms and Conditions for Canadian Customers, and by signing the Trading Application, purchasers are consenting to that collection, use and disclosure of their personal information, subject to the right to opt-out in respect of certain secondary purposes. STATUTORY RIGHTS OF ACTION RIGHTS OF ACTION FOR DAMAGES OR RESCISSION In addition to and without derogation from any right or remedy that a purchaser of CFDs may have at law, securities legislation in certain of the provinces of Canada provides that a purchaser has or must be granted rights of rescission or damages, or both, where the offering memorandum and any amendment thereto contains a misrepresentation. However, such rights must be exercised by the purchaser within prescribed time limits. As used herein, except where otherwise specifically defined, misrepresentation means an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement in the offering memorandum not misleading in light of the circumstances in which it was made. material fact means a fact that significantly affects, or would reasonably be expected to have a significant effect on, the market price or value of the CFDs. Each purchaser should refer to provisions of the applicable securities legislation for the particulars of these rights or consult with a legal adviser. The following is a summary of the rights of rescission or damages, or both, available to purchasers under the securities legislation of Ontario, New Brunswick and Nova Scotia. RIGHTS FOR PURCHASERS IN ONTARIO If this Memorandum, together with any amendment thereto, delivered to a purchaser of CFDs resident in Ontario contains a misrepresentation, the purchaser has, without regard to whether the purchaser relied on the misrepresentation, a right of action against CMC for damages or, alternatively, while still the owner of the CFDs, for rescission, provided that no action may be commenced to enforce a right of action: 1) no action may be commenced to enforce a right of action: a) for rescission more than 180 days after the date of the purchase; or 13

14 b) for damages more than the earlier of (i) 180 days after the purchaser first had knowledge of the facts giving rise to the cause of action, or (ii) three years after the date of purchase; 2) CMC will not be liable if it proves that the purchaser purchased the CFDs with knowledge of the misrepresentation; 3) in an action for damages, CMC will not be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the CFDs as a result of the misrepresentation relied upon; and 4) in no case shall the amount recoverable exceed the price at which the CFDs were sold to the purchaser. RIGHTS FOR PURCHASERS IN SASKATCHEWAN If this Memorandum, together with any amendment hereto, is delivered to a purchaser resident in Saskatchewan and contains a misrepresentation at the time of purchase, the purchaser is deemed to have relied upon that misrepresentation and will have a right for damages against CMC, every promoter and director of CMC (as the case may be), every person or company who signed this Memorandum and every person or company who sells CFDs on behalf of CMC, or alternatively, while still the owner of the purchased CFDs, for rescission against CMC, provided that: 1) no action shall be commenced to enforce the foregoing rights: a) in the case of an action for rescission, more than 180 days after the date of the transaction that gave rise to the cause of action; or b) in the case of any action, other than an action for rescission, the earlier of (i) one year after the purchaser first had knowledge of the facts giving rise to the cause of action, or (ii) six years after the date of the transaction that gave rise to the cause of the action; 2) no person or company will be liable if the person or company proves that the purchaser purchased the CFDs with knowledge of the misrepresentation; 3) no person or company (but excluding CMC) will be liable if the person or company proves that (i) the Memorandum was delivered without the person s or company s knowledge or consent and that, on becoming aware of its delivery, the person or company immediately gave reasonable general notice to CMC 14

15 that it was delivered without the person s or company s knowledge, (ii) on becoming aware of any misrepresentation, the person or company withdrew the person s or company s consent to the Memorandum and gave reasonable general notice to CMC of the withdrawal and the reason for it, or (iii) with respect to any part of the Memorandum purporting to be made on the authority of an expert or to be a copy of, or an extract from, a report, an opinion or a statement of an expert, the person or company had no reasonable grounds to believe and did not believe that there had been a misrepresentation, or the relevant part of the Memorandum did not fairly represent the report, opinion or statement of the expert, or was not a fair copy of or extract from the report, opinion or statement of the expert; 4) no person or company (but excluding CMC) will be liable with respect to any part of the Memorandum not purporting to be made on the authority of an expert, or to be a copy of or an extract from a report, opinion or statement of an expert, unless the person or company failed to conduct a reasonable investigation sufficient to provide reasonable grounds for a belief that there had been no misrepresentation, or believed there had been a misrepresentation; and 5) in no case shall the amount recoverable exceed the price at which the CFDs were sold to the purchaser. A purchaser resident in Saskatchewan who has entered into an agreement for the purchase of CFDs, which has not yet been completed, and who receives an amendment to this Memorandum that discloses (i) a material change in the affairs of CMC, (ii) a change in the terms or conditions of the offering as described in this Memorandum or (iii) securities to be distributed that are in addition to the CFDs described herein, that occurred or arose before the purchaser entered into the agreement for the purchase of the CFDs, may within two business days of receiving the amendment deliver a notice to the Manager or agent through whom the CFDs are being purchased indicating the purchaser's intention not to be bound by the purchase agreement. RIGHTS FOR PURCHASERS IN MANITOBA In the event that this Memorandum or any amendment hereto contains a misrepresentation, a purchaser is deemed to have relied on the misrepresentation and has a right of action for damages against CMC, every director of CMC at the date of the Memorandum and every person or company who signed the Memorandum, or alternatively, while still the owner of the purchased CFDs, a right of rescission against CMC, provided that: 15

16 1) no action may be commenced to enforce a right of action: a) for rescission more than 180 days after the date of the purchase; or b) for damages, the earlier of (i) 180 days after the purchaser first had knowledge of the facts giving rise to the cause of action, or (ii) two years after the date of the purchase; 2) no person or company will be liable if the person or company proves that the purchaser purchased the CFDs with knowledge of the misrepresentation; 3) no person or company (but excluding CMC) will be liable if the person or company proves that (i) the Memorandum was sent to the purchaser without the person s or company s consent, and that, after becoming aware of its delivery, the person or company promptly gave reasonable notice to CMC that it was sent without the person s or company s knowledge or consent, (ii) on becoming aware of the misrepresentation, the person or company withdrew their respective consent to the Memorandum and gave reasonable notice to CMC of the withdrawal and the reason for it, or (iii) with respect to any part of the Memorandum purporting to be made on the authority of an expert or to be a copy of, or an extract from, an expert s report, opinion or statement, the person or company proves that they had no reasonable grounds to believe and did not believe that there had been a misrepresentation, or the relevant part of the Memorandum did not fairly represent the expert s report, opinion or statement, or was not a fair copy of, or an extract from, the expert s report or statement; 4) no person or company (but excluding CMC) will be liable with respect to any part of the Memorandum not purporting to be made on the authority of an expert and not purporting to be a copy of, or an extract from, an expert s report, opinion or statement, unless the person or company did not conduct an investigation sufficient to provide reasonable grounds for a belief that there had been on misrepresentation, or believed that there had been a misrepresentation; and 5) in no case shall the amount recoverable exceed the price at which the CFDs were sold to the purchaser. 16

17 RIGHTS FOR PURCHASERS IN NEW BRUNSWICK In the event that this Memorandum, together with any amendment thereto, delivered to a purchaser of CFDs resident in New Brunswick contains a misrepresentation and it was a misrepresentation at the time of purchase, the purchaser will be deemed to have relied on the misrepresentation and will have a right of action against CMC for damages or, alternatively, while still the owner of the CFDs, for rescission, provided that: 1) no action may be commenced to enforce a right of action: a) for rescission more than 180 days after the date of the purchase; and b) for damages more than the earlier of (i) one year after the purchaser first had knowledge of the facts giving rise to the cause of action, and (ii) six years after the date of purchase; 2) CMC will not be liable if it proves that the purchaser purchased the CFDs with knowledge of the misrepresentation; 3) in an action for damages, CMC will not be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the CFDs as a result of the misrepresentation; and 4) in no case shall the amount recoverable exceed the price at which the CFDs were sold to the purchaser. RIGHTS FOR PURCHASERS IN NOVA SCOTIA If this Memorandum or any amendment hereto or any advertising or sales literature (as defined in the Securities Act (Nova Scotia)) delivered to a purchaser of CFDs resident in Nova Scotia contains a misrepresentation and it was a misrepresentation at the time of purchase, the purchaser will be deemed to have relied on the misrepresentation and will have a right of action for damages against CMC, any director of CMC (within the meaning of the Securities Act (Nova Scotia)) at the date of this Memorandum, or any other person who signed this Memorandum, but may elect to exercise a right of rescission against CMC, in which case the investor shall have no right of action for damages against CMC, any such director of CMC or any such other person, provided that, among other limitations: 1) no action may be commenced to enforce a right of action more than 120 days: a) after the date on which payment was made for the CFDs; or 17

18 b) after the date on which the initial payment for the CFDs was made where payments subsequent to the initial payment are made pursuant to a contractual commitment assumed prior to, or concurrently with, the initial payment; 2) in an action for rescission or damages, the defendant will not be liable if it proves that the purchaser purchased the CFDs with knowledge of the misrepresentation; 3) in an action for damages, the defendant is not liable for all or any portion of the damages that it proves do not represent the depreciation in value of the CFDs as a result of the misrepresentation relied upon; 4) in no case shall the amount recoverable under the right of action described herein exceed the price at which the CFDs were sold to the purchaser; 5) no person or company other than CMC will be liable if the person or company proves that (i) this Memorandum or the amendment thereto was sent or delivered to the purchaser without the person s or company s knowledge or consent and that, on becoming aware of its delivery, the person or company gave reasonable general notice that it was delivered without the person s or company s knowledge or consent, (ii) after delivery of this Memorandum or the amendment thereto and before the purchase of the CFDs by the purchaser, on becoming aware of any misrepresentation in this Memorandum or the amendment thereto, the person or company withdrew the person s or company s consent to this Memorandum or the amendment thereto and gave reasonable general notice of the withdrawal and the reason for it, or (iii) with respect to any part of this Memorandum or the amendment thereto purporting to be made on the authority of an expert or to be a copy of, or an extract from, a report, an opinion or a statement of an expert, the person or company had no reasonable grounds to believe and did not believe that there had been a misrepresentation, or the relevant part of this Memorandum or the amendment thereto did not fairly represent the report, opinion or statement of the expert, or was not a fair copy of, or an extract from, the report, opinion or statement of the expert; 6) no person or company other than CMC will be liable with respect to any part of this Memorandum or the amendment thereto not purporting to be made on the authority of an expert, or to be a copy, or an extract from, a report, opinion or statement of expert unless the person or company failed to conduct a reasonable investigation to provide reasonable grounds for a belief that there had been no misrepresentation, or believed that there had been a misrepresentation; and 18

19 7) if a misrepresentation is contained in a record incorporated by reference in, or deemed incorporated into, this Memorandum or the amendment thereto, the misrepresentation is deemed to be contained in this Memorandum or the amendment thereto. RIGHTS FOR PURCHASERS IN OTHER OFFERING JURISDICTIONS Customers in the other Offering Jurisdictions should consult their legal advisor with respect to any rights that may be available to them. ENFORCEMENT OF LEGAL RIGHTS CMC is organized under the laws of England and Wales and is located outside of Canada and, as a result, it may not be possible for Canadian investors to effect service of process within Canada upon CMC. All or a substantial portion of the assets of CMC may be located outside of Canada and, as a result, it may not be possible to satisfy a judgement against CMC in Canada or to enforce a judgement obtained in Canadian courts against CMC outside of Canada. TAXATION AND ELIGIBILITY FOR INVESTMENT Investors in CFDs should consult their own legal and tax advisers with respect to the tax consequences of an investment in the CFDs in their particular circumstances and with respect to the eligibility of the CFDs for investment by the investor under relevant legislation. CONFLICTS OF INTEREST Securities legislation in Ontario requires that potential conflicts of interest be fully disclosed in this Memorandum. Such potential conflicts are perceived to arise whenever a registrant such as CMC Markets participates in the distribution of securities of a related or connected issuer. In this case, because CMC Markets is a subsidiary of CMC and because CMC Markets will receive a commission on each CFD offered hereunder which the customer opens or closes, CMC is considered both a related issuer and a connected issuer of CMC Markets. Details of this relationship are disclosed in the Statement of Policies of CMC Markets. 19

20 CMC MARKETS CANADA INC. STATEMENT OF POLICIES CONCERNING CONFLICTS OF INTEREST WITH RELATED ISSUERS AND CONNECTED ISSUERS February 2008 CMC Markets Canada Inc. ( CMC Markets ) may engage in activities as an investment dealer in respect of securities of related issuers but will do so only in compliance with Part XIII of the Regulation under the Securities Act (Ontario). It is the duty and policy of CMC Markets to deal fairly, honestly and in good faith with its clients. It is also the policy of CMC Markets to comply fully with all applicable securities laws and to make all required disclosure. The securities laws of certain provinces require securities dealers and advisers, when they trade in or advise with respect to their own securities or securities in certain other issuers to which they, or certain other parties related to them, are related or connected, to do so only in accordance with particular disclosure and other rules. These rules require dealers and advisers, prior to trading with or advising their customers or clients, to inform them of the relevant relationship and connections with the issuer of the securities. Clients and customers should refer to the applicable provisions of these securities laws for the particulars of these rules and their rights or consult with a legal adviser. CMC Markets is an investment dealer in Ontario. In performing its services, CMC Markets may from time to time advise on or trade in securities of one of its related, connected or associated issuers. Related issuer means, in respect of CMC Markets, an issuer of securities over which CMC Markets exercises a controlling influence (for example, through the ownership of, or direction or control over voting securities) or an issuer of securities that exercises a controlling influence over CMC Markets. In this context, the term influence means having the power, directly or indirectly, to exercise a controlling influence over the management and policies of the company, whether alone or in combination with one or more other persons or companies. 20

21 Connected issuer means, in respect of CMC Markets, an issuer that has, or any related issuer of which has, any indebtedness to, or other relationship with, (i) CMC Markets, (ii) related issuer of CMC Markets, (iii) director, officer or partner of CMC Markets or (iv) director, officer or partner of a related issuer of CMC Markets, that, in connection with a distribution of securities of the issuer, is material to a prospective purchaser of the securities. Accordingly, an issuer is connected to CMC Markets if, due to indebtedness or other relationships, a prospective purchaser of securities of the connected issuer might question CMC Markets independence from the issuer. CMC Markets is an affiliate of CMC Markets UK plc ( CMC UK ). Consequently, CMC UK is a "connected issuer" and a "related issuer" of CMC Markets within the meaning of the securities legislation of each of the provinces of Canada in connection with the offering of contracts for difference. Goldman Sachs Strategic Investments (U.K.) Limited owns 10% of the ultimate parent company of CMC Markets and CMC UK, CMC Markets plc. The ultimate shareholder of Goldman Sachs Strategic Investments (U.K.) Limited, The Goldman Sachs Group Inc. (GS) is a "connected issuer" and a "related issuer" of CMC Markets within the meaning of the securities legislation of each of the provinces of Canada in connection with the offering of contracts for difference. GS is a publicly traded company on the New York Stock Exchange (NYSE; Ticker: GS) and as of December 14, 2007 CMC UK removed GS as a tradeable instrument via CFDs from CMC s online trading platform (Marketmaker.). In addition, CMC Markets or other related parties may act as principal or agent in respect of securities purchased or sold by or to clients of CMC Markets. Statement of Related Registrants Ontario securities legislation also requires securities dealers and advisers to inform their clients if the dealer or adviser has a principal shareholder, director or officer that is a principal shareholder, director or officer of another dealer or adviser (a Related Registrant ) and of the policies and procedures adopted by the dealer or adviser to minimize the potential for conflicts of interest that may result from this relationship. 21

22 CMC Markets UK plc ( CMC UK ) is a dealer in the category of international dealer in Ontario. CMC Asia Pacific Pty Ltd. ( CMC Australia ) is a dealer in the category of international dealer in Ontario. CMC UK, CMC Australia and CMC Markets share the same ultimate parent company being CMC Markets plc. Due to the fact that Goldman Sachs Strategic Investments (U.K.) Limited is a 10% shareholder in CMC Markets ultimate parent company (CMC Markets plc), the following Goldman Sachs group entities (the Goldman Sachs Entities ) would be considered to be Related Registrants: Goldman Sachs Canada Inc. is an investment dealer in Ontario and in an equivalent category in the provinces of Alberta, British Columbia and Quebec. Goldman Sachs Canada Inc. is also a member of the Investment Dealers Association of Canada (the IDA ). Goldman Sachs Asset Management, L.P. is a non-canadian adviser and commodity trading manager in Ontario and in an equivalent category in the provinces of Alberta, British Columbia, Manitoba and Saskatchewan. Goldman Sachs Execution & Clearing, L.P. is a limited market dealer and international dealer in Ontario. Goldman Sachs Hedge Fund Strategies LLC is an international adviser in Ontario. Goldman Sachs International is an international dealer in Ontario. Goldman, Sachs & Co is registered as an international adviser and international dealer in Ontario and in an equivalent category in the provinces of Alberta, British Columbia, Manitoba, Prince Edward Island, Quebec and Saskatchewan. Please be advised that CMC Markets has adopted policies and procedures to minimize the potential for conflicts of interest that may result from these relationships. The day-to-day administration and operation of CMC Markets will remain completely separate from any of the Goldman Sachs Entities and CMC Markets does not anticipate making any changes to their operations as a result of this relationship. 22

23 CMC Markets as a Related Registrant of the Goldman Sachs Entities complies with Part 2 of OSC Rule Registrant Relationships in respect of the new registrant relationships. Please be advised that no registered individuals (including any salespeople, officer or directors) of CMC Markets are dually registered with any Goldman Sachs Entities. CMC Markets also complies with any applicable provisions of part 3 of National Instrument Regulation of Certain Registrant Activities with respect to holding all information about a retail client confidential. If there is any change in this information, we will update our clients forthwith. CONTACT DETAILS: CMC MARKETS CANADA INC. 130 Adelaide Street West, Suite 1800 Toronto, Ontario, Canada M5H 3P5 Customer Service: Toll Free: / Support Line: Fax: info@cmcmarkets.ca 23

24 C A N A D I A N T E R M S A N D C O N D I T I O N S

25 TERMS AND CONDITIONS FOR CANADIAN CUSTOMERS GENERAL DISCLAIMERS PERSONAL INFORMATION DISCLAIMER Any personal information you provide in any form to CMC Markets Canada Inc. ( CMC Markets ) or CMC Markets UK Plc ( CMC ) or any of their affiliates, and any personal information which CMC Markets or CMC has about you, will be dealt with in accordance with clause 15 of the Canadian Terms and Conditions. SECURITY DISCLAIMER While CMC Markets and CMC seek to ensure the security of information and operations on their websites, they make no guarantee that the information or files available on their sites are free of viruses or any other data or code which might corrupt the operation of your computer system, hardware, or software. CMC Markets and CMC do not accept responsibility for any errors or omissions on their websites, nor are they responsible for the contents, maintenance of, or activities conducted on any website to which their websites provide a link. Your use of any such other websites is entirely at your own risk. 2

26 TABLE OF CONTENTS TERMS AND CONDITIONS FOR CANADIAN CUSTOMERS TERMS AND CONDITIONS...5 APPLICATION TO TRADE WITH CMC MARKETS...6 TRUST ACCOUNT...7 ACCOUNT NUMBER AND PASSWORD...9 SECURITIES OFFERED BY CMC MARKETS...10 TRADING WITH CMC MARKETS AND CMC...10 CLOSING OF TRADES...13 SECURITIES MARGIN...14 SETTLEMENT...16 ACCOUNT STATEMENTS...16 NO WARRANTIES...17 DISPUTES...17 CUSTOMER REPRESENTATION AND WARRANTIES...18 TRADING DECISIONS AND INFORMATION...21 PERSONAL INFORMATION...21 MANIFEST ERRORS...23 FORCE MAJEURE...23 INFORMATION AND INTELLECTUAL PROPERTY...25 UNSOLICITED CALLS...26 TERMINATION...26 WAIVER...26 ENTIRE AGREEMENT...27 LIABILITY...27 VARIATION...27 TAXES...28 EVIDENCE...28 NOTICES...28 ASSIGNMENT...29 INTERPRETATION...29 GOVERNING LAW

27 APPENDIX A: WEBSITE TERMS AND CONDITIONS...31 ACCEPTANCE OF TERMS...31 MATERIALS ON THE WEBSITE...31 COPYRIGHT...32 DISCLAIMERS...32 LIMITATION OF LIABILITY...32 LINKS TO AND USE OF OTHER WEBSITES...33 LINKING TO THIS WEBSITE...33 PRIVACY POLICY...33 WEBSITE ETIQUETTE...33 CHANGES TO THESE TERMS AND CONDITIONS...34 WHICH LAWS APPLY...34 TERMINATION...34 APPENDIX B: RISK DISCLOSURE AND ACKNOWLEDGEMENT

28 TERMS AND CONDITIONS 1.1 This document contains the terms and conditions (the Canadian Terms and Conditions ) which shall govern the trades in the Contracts for Difference ( CFDs ) issued by CMC Markets UK Plc ( CMC ) as distributed and conducted by CMC Markets Canada Inc. ( CMC Markets ) on behalf of you (the Customer ). In addition to the Canadian Terms and Conditions, the Customer will also be bound by the terms and conditions set out in the following documents: CMC Markets Website Terms and Conditions which is attached as Appendix A to these Canadian Terms and Conditions; Risk Disclosure and Acknowledgement which is attached as Appendix B to these Canadian Terms and Conditions; The Confidential Offering Memorandum dated November 2007 (the Memorandum ) and those documents incorporated by reference therein (including these Canadian Terms and Conditions, CMC s Terms of Business (the Terms of Business ), the Risk Disclosure Notice, the Execution Policy and the Rates Schedule), and the Trading Application Form (the Trading Application ). For the exception of clause 6.2 of these Canadian Terms and Conditions, to the extent that there is any conflict between the provisions of the Canadian Terms and Conditions and the respective Website Terms and Conditions or the Terms of Business, the provisions of the Terms of Business will prevail. 1.2 CMC Markets will only conduct business with a Customer for whom it considers such business to be appropriate and in assessing appropriateness, will rely on the information provided by the Customer in the Trading Application. For this reason, it is essential that Customers immediately (and no later than one (1) business day) advise CMC Markets in writing (fax or transmission is acceptable) if there is subsequently any material change in the information which you have provided in your Trading Application or in any Required Document. 1.3 No investment advice or recommendation will be provided by CMC Markets regarding the purchase or sale of any security. All trading decisions are made by the Customer and are done so at a Customer s own risk. Each Customer must rely on their own judgment and information before trading and, where necessary, seek independent advice. It is the responsibility of every Customer to be aware of all terms, conditions, rules and regulations that govern a market, an underlying security, or CFD. 5