MARGIN ACCOUNT HELPING YOU REACH YOUR INVESTMENT GOALS. A margin account used responsibly and effectively can help accelerate wealth creation.



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MARGIN ACCOUNT HELPING YOU REACH YOUR INVESTMENT GOALS A margin account used responsibly and effectively can help accelerate wealth creation. Seize investment opportunities as they arise with quick and convenient access to additional funds. Learn how the FirstMetroSec Margin Account can help you get more leverage on your investments today.

Contents What is the FirstMetroSec Margin Account? How does the FirstMetroSec Margin Account differ from a regular Cash Account? How does the FirstMetroSec Margin Account work? Why should you have the FirstMetroSec Margin Account? What are the risks of having the FirstMetroSec Margin Account? How do you protect yourself from these risks? What stocks may you use as collateral? How much can you borrow? What happens if the price of the securities purchased on margin declines? What is the interest rate and how will it affect the total return on your investments? Tips to manage risk Contents 3 3 4 5 6 7 7 9 10 14 15 2 FIRSTMETROSEC MARGIN ACCOUNT

What is the FirstMetroSec Margin Account? They say it takes money to make money. While this is true, it doesn t mean you need to rely on your own resources alone. You might be able to make money faster by borrowing funds to invest using your existing securities as leverage. The FirstMetroSec Margin Account enables you to borrow additional funds at any time to buy more stocks using marginable stocks you already own as collateral. How does the FirstMetroSec Margin Account differ from a regular Cash Account? The FirstMetroSec Margin Account is not like your typical Cash Account where all purchases must be 100% paid in full. In the FirstMetroSec Margin Account, you are allowed to buy securities by only paying for half the cost and then borrowing the rest. It practically doubles your buying power and multiplies your earning potential. Cash Account Client A buys of stock and pays 100% in cash FirstMetroSec Margin Account Client B buys 2M of stock and pays 50% cash and 50% debt + BORROW +30% Gain 0.3M Stock Value = 1.3M 30% Return Profit 0.3M vs. Cash +30% Gain 0.6M -15% Interest 0.15M Stock Certificate Stock Certificate 2M Stock Value = 2.45M 45% Return Profit 0.45M vs. Cash www.fi rstmetrosec.com.ph 3

How does the FirstMetroSec Margin Account work? First, you need to open a FirstMetroSec Margin Account by signing the Margin Trading Agreement which you can download from our website. Initial Equity Requirement The FirstMetroSec Margin Account requires at least 1 Million in initial equity. The equity may be in the form of cash and/or stocks eligible for margin. Equity Level Maintenance Requirement To keep your credit line open, you must maintain a minimum equity level of 50%. Equity is the value of stocks you own minus what you owe. This means that if you have 2 Million worth of stocks in your account, your loan balance should not exceed 1 Million. Repayment and Interest Rate There is no repayment schedule. The loan can be kept as long as you want, but the stocks in your account are held as collateral and interest charges accrue over time. When a stock is sold, the proceeds are used to repay the loan first. 4 FIRSTMETROSEC MARGIN ACCOUNT

Why should you have the FirstMetroSec Margin Account? The FirstMetroSec Margin Account can help you reach your investment goals faster if used wisely and prudently. Accelerate Wealth Creation Amplify your potential returns by building an investment portfolio up to twice as big as what you normally can with your own money. Reduce Risk If your investment is concentrated in a few stocks, you can use the additional buying power to buy more stocks so you can diversify your portfolio. Seize Opportunities With standby credit at your disposal, you have the flexibility to take advantage of timely market opportunities as they arise without reallocating funds. www.firstmetrosec.com.ph 5

What are the risks of having the FirstMetroSec Margin Account? Margin Trading is a double-edged sword. While gains are amplified in bull markets, substantial losses can mount quickly in bear markets. If portfolio value falls considerably, additional equity might be demanded on short notice or else face a force sale. Once stocks are sold after prices have plummeted, you ve lost out on the chance to recoup your losses. Cash Account Client A loses on a stock of paid 100% in cash Stock Certificate -10% -10% Loss 0.1M Return Loss 0.1M vs. Cash Stock Value = 0.9M FirstMetroSec Margin Account Client B loses on a 2M stock of paid 50% in cash and 50% debt + 2M BORROW Stock Certificate Stock Certificate -10% Loss 0.2M -15% Interest 0.15M -35% Return Loss 0.35M vs. Cash Stock Value = 1.65M 6 FIRSTMETROSEC MARGIN ACCOUNT

How do you protect yourself from these risks? Buying on margin is a risky endeavor, especially for investors new to the concept. To protect yourself, here are the things you need to do: Understand what happens if the price of the securities purchased on margin declines. Know that you are charged interest for borrowing money and that will affect the total return on your investments. Be aware that not all stocks can be used as margin or security for the loan. Ensure that trading on margin is appropriate for you in light of your investment objectives, risk tolerance, and personal circumstances. What stocks may you use as collateral? Not all stocks are considered eligible for margin or collateral. Only stocks that pass the minimum eligibility criteria may qualify as marginable. Further, stocks that are currently listed as marginable may lose their status if they fail to meet the standards in the future. In these circumstances, clients with outstanding loans may be required to substitute eligible securities as replacement. First Metro Securities has discretion to change its eligibility criteria at any time. www.firstmetrosec.com.ph 7

Marginable Securities TICKER TEL ALI BDO SM URC AGI MBT AC SMPH MEG BPI EDC GTCAP JGS ICT DMC AP PGOLD GLO BLOOM JFC SECB MPI NIKL RRHI LTG These are the stocks which can be used as collateral in your FirstMetroSec Margin Account as of July 31, 2015. PLDT Co. Ayala Land, Inc. BDO Unibank STOCK NAME SM Investments Corporation Universal Robina Corporation Alliance Global Group, Inc. Metropolitan Bank and Trust Company Ayala Corporation SM Prime Holdings Megaworld Corporation Bank of the Philippine Islands Energy Development Corporation GT Capital Holdings, Inc. JG Summit Holdings, Inc. Int l Container Terminal Services DMCI Holdings, Inc. Aboitiz Power Corporation Puregold Price Club, Inc. Globe Telecom, Inc. Bloomberry Resorts Corporation Jollibee Foods Corporation Security Bank Corporation Metro Pacific Investments Corporation Nickel Asia Corporation Robinsons Retail Holdings, Inc. LT Group, Inc. 8 FIRSTMETROSEC MARGIN ACCOUNT

How much can you borrow? You may borrow up to 50% of the purchase price of stocks that can be bought on margin. This effectively multiplies your buying power by two. Cash Account Client A buys 2M of by paying 2M in cash 2M 2M FirstMetroSec Margin Account Client B buys 2M of by paying cash and borrowing the rest + BORROW 2M www.fi rstmetrosec.com.ph 9

What happens if the price of the securities purchased on margin declines? Minimum Equity Requirement After you buy stocks on margin, make sure you maintain at least 50% level of equity on your margin account at all times. The equity in your margin account is the value of your marginable stocks you own less how much you owe. Equity Percentage is the value of equity divided by the value of marginable stocks in your account. Margin Requirement Met Client buys 2M of stock and pays 50% cash, 50% debt + BORROW +30% Gain 0.6M Stock Certificate 62% 2M Portfolio Value = 2.6M Equity Equity 1.6M Loan 1.0M Portfolio 2.6M 10 FIRSTMETROSEC MARGIN ACCOUNT

Margin Alert If your account falls below the minimum maintenance requirement, no need to worry yet. A 10% buffer is in place to assist you in managing small market movements. At this point, you will only receive a Margin Alert which is a notification that your equity has fallen below the required minimum. Margin Alert Client buys 2M of stock and pays 50% cash, 50% debt + BORROW 2M Stock Certificate -10% Loss 0.2M Portfolio Value = 1.8M 44% Equity Equity 0.8M Loan 1.0M Portfolio 1.8M www.fi rstmetrosec.com.ph 11

Margin Call Your equity level needs to fall below the 40% threshold before you get a Margin Call. At this instant, you will be required to bring your equity back above minimum within 5 trading days, or else sufficient securities in your account will be sold to cover the deficiency. If your stocks are sold off after prices have plunged, then your losses are locked in and you lose your chance to participate in any future rebounds that may take place. Margin Call Client buys 2M of stock and pays 50% cash, 50% debt + BORROW 2M Stock Certificate -20% Loss 0.4M Portfolio Value = 1.6M 38% Equity Equity 0.6M Loan 1.0M Portfolio 1.6M What to do in case of a margin call? In the event of a Margin Call, you can bring your equity back to an acceptable level by: Depositing sufficient cash into your account Selling sufficient stocks to pay down the loan Infusing more stocks eligible for margin 12 FIRSTMETROSEC MARGIN ACCOUNT

Margin Suspension Make sure your equity level does not fall below 30%, because at this instant, your margin trading privileges shall automatically be suspended. If your margin account is suspended, sufficient amount of stocks will be sold to pay off your loan and your account is then converted into a regular Cash Account. In case the proceeds from the sale of the securities in your account are not sufficient to fully cover the loan, you remain personally liable for the loan balance, as well as for any cost incurred in collecting that amount. Margin Suspension Client buys 2M of stock and pays 50% cash, 50% debt + BORROW 2M Stock Certificate -30% Loss 0.6M Portfolio Value = 1.4M 29% Equity Equity 0.4M Loan 1.0M Portfolio 1.4M www.fi rstmetrosec.com.ph 13

What is the interest rate and how will it affect the total return on your investments? As with most loans, you are required to pay interest on the amount you owe in your margin account until the loan is repaid. The interest rate is 1.25% per month + 12% VAT, which is subject to change without prior notice. The amount of interest charged to your account is accrued daily based on the debit balance in your margin account and billed at the end of each month. You should review your billing statements carefully to stay informed of the amount of interest you are paying for your margin loan. Interest expense on a margin loan can materially reduce the rate of return on your investment. 14 FIRSTMETROSEC MARGIN ACCOUNT

Tips to manage risk Here are some tips to help you manage your FirstMetroSec Margin Account wisely. Diversify Diversify your portfolio to reduce your exposure to the price movements of any single security. Monitor Your Loan Monitor your portfolio regularly to make sure you don t fall below the required equity level. Check Your Suitability Make sure your investments and your current level of borrowing is appropriate for your risk profile, financial resources and investment objective. Don t Be Fully Leveraged Borrow less than the maximum amount allowable in your account to avoid the risk of a margin call. www.fi rstmetrosec.com.ph 15

Let us help you Whether you are new to the margin trading concept or already an experienced investor, there are probably a few questions you d like to ask us about FirstMetroSec Margin Account. It would be our pleasure to help you. customerservice@firstmetrosec.com.ph (02) 859 0600 18th Floor PSBank Center 777 Paseo de Roxas corner Sedeño Street Makati City 1226 /firstmetrosec @firstmetrosec www.firstmetrosec.com.ph www.firstmetrosec.ph Online Trading. Revolutionized.