Risk Disclosure Statements for Bonds

Key risks of investing in bonds

• Bonds are debt securities that offer fixed returns over a defined period and are intended to be held to maturity. These instruments carry a number of risks such as credit, default, interest, currency and liquidity risks. Credit risk arises from default events that may result in the inability of the issuer to pay interest or principal. Default risk is high when credit rating is non-investment grade or non-rated. In a default situation, the buyer may lose both interest and principal. Interest risk arises as bond prices generally move inversely with interest rates. Currency risk arises from holding debt securities that are issued in a foreign currency, hence exposing the buyer to fluctuations in exchange rate. There is a chance that if the currency moves adversely, the buyer may also suffer a loss. Liquidity risk refers to the availability of prices for buying and selling in a market. It is common for most debt securities to suffer from poor liquidity because they are quoted over-the-counter (OTC).

• OTC products are not listed or available on a securities exchange, but traded directly between two parties. Thus, one is exposed to the credit risk of the counterparty in which they enter into bilateral agreement with. FSM Global does not warrant that there is an active trading market and the price FSM Global secures for the customer will at any time be the best price we procure

Bond Buy and Sell Transactions

Acting as Agent: iFAST will enter into the transaction with customer as agent, unless otherwise stated.

• Bond Processing Fee is up to 0.35% of Bond Nominal Value for each buy/sell order, subject to a minimum amount (in the equivalent currency) which may vary depending on the trading venue. GST applies to Processing Fee but only for Singapore Tax Residents.

• For Buy transactions, an additional buffer rate of up to 5% may be required for the payment of bond purchases. This is to cater for fluctuations in market prices and/or currency conversion.

• The cut-off time for orders is 5pm on any business day.

• Purchase order will be processed on the same business day when the order is received before 5pm*. iFAST will attempt to execute your order on the same business day. Purchase order will be processed on the next business day if the order is received on or after 5pm*, unless otherwise notified.

• Sell orders will be processed on the same business day if the orders are placed before cut-off time. Redemption amount will be paid according to your redemption method.

• An email confirmation with the transaction details will be sent to you when your buy/ sell order is transacted.

• All orders submitted will be irrevocable once they are filled.

• Market Order is an order to buy or sell at the prevailing market price (accrued interest not inclusive) at the time of execution. For OTC bonds, iFAST will begin dealing on ‘T’ and try to fulfil an order with counterparty for up to another 3 business days, until the market closes, and the order will expire after that. iFAST has the discretion to determine the time to place a Market Order.

• Limit Order is an order to buy or sell at a specific price (accrued interest not inclusive). For Buy transactions, client should indicate the maximum price he wishes to buy Bonds at. For Sell transactions, client should indicate the minimum price he wishes to sell Bonds at. An order will only be executed with the counterparty if iFAST is able to match against the price indicated by client. For OTC bonds, iFAST will begin dealing on ‘T’ and try to fulfil an order with counterparty for up to another 3 business days, until the market closes, and the order will expire after that. iFAST has the discretion to determine the time to place a Limit Order.

• Range Order is an order to buy or sell within a range of 3% above (for Buy transaction) or below (for Sell transaction) the prevailing indicative price (accrued interest not inclusive) at the time of order placement. An order will only be executed with the counterparty if iFAST is able to match within the pre-determined price range or better. For OTC bonds, iFAST will begin dealing on ‘T’ and try to fulfil an order with counterparty for up to another 3 business days, until the market closes, and the order will expire after that. iFAST has the discretion to determine the time to place a Range Order.

• Pre-Transaction Payment Options – A confirmation email with the transaction details will be sent to you upon successful execution of a purchase order. In the unlikely event that your pre-transaction payment is insufficient, you will be required to top-up the difference. If this top-up amount is not received, the Bond will be sold in the secondary market and any losses arising from such a transaction will be recovered from you.

• Post-Transaction Payment Option – You will only be required to make full payment once your purchase order is successfully executed. You will be advised of the full payment amount and payment due date in a separate confirmation email with the transaction details. This payment option is available only if you have sufficient Cash (non-CPF / non-SRS) holdings (e.g. Cash Account/Auto-Sweep Account/Unit Trust/Bonds) in your account and should not be construed as a credit facility, loan or advance provided by iFAST. iFAST reserves the right to earmark your Cash holdings (equivalent to a percentage of the estimated investment amount payable) to facilitate the transaction. This earmarked amount shall be released: (i) upon receipt of full payment for your executed bond purchase order; or (ii) in the event that your bond purchased order is not fulfilled within 4 business days (resulting in the expiry of the purchase order). Any redemption proceeds due to you during this period shall be withheld by iFAST until the full payment amount is received. iFAST must receive full payment from you before the settlement timeline with its counterparty for the transaction to be completed. In the event that the full payment is not made by the payment due date, the Bond will be sold in the secondary market at the prevailing price and any losses arising from the transaction will be recovered from you. iFAST reserves the right to deduct any shortfall from your Cash Account, Auto-Sweep Account, existing investment holdings, or any outstanding proceeds due to you. iFAST also reserves the right to charge an administrative fee in the event of non-payment. In relation to this option, iFAST reserves the absolute discretion on the granting of such option to you.

• Any future coupon payment and the principal amount upon maturity will be automatically deposited into the respective currency Cash Account or Auto-Sweep Account. Auto-Sweep Account is applicable only in SGD / USD and exclusively for clients that have opted in.

• Please note that only certain bond(s) are available to all investors, while the rest are only available for certain persons to invest in, such as Accredited Investors (as defined in the Securities and Futures Act 2001) or one who invests at least S$200,000 (or its equivalent currency) per transaction. To qualify as an Accredited Investor, one needs to submit a declaration form and certain relevant supporting documents, according to iFAST’s prevailing policies and procedures.

• All subscription orders received are irrevocable.
• Payments are not required upfront for new bond issue subscriptions unless otherwise informed. Please note that iFAST reserves the right to earmark your cash holdings to facilitate the subscription order on case-by-case basis.
• Upon successful allocation of the new bond issue subscription, you will be advised on the full payment amount via email.
• Your payment has to reach us within 2 business days (inclusive of the day when you are informed of your successful allocation), unless otherwise informed.
• If there is any outstanding payment required for any new issue subscription successfully allocated after the stipulated payment due date, we have the right to force sell any or all of these Securities. You shall be responsible for any Loss suffered by iFAST and iFAST shall not be liable to the Customer for any Loss, suffered by the Customer, including but not limited to a Loss as a result of any fall in the market price of the Securities between the time the right to force sell arose and the time it actually sells the Securities.
• An email confirmation with the subscription details will be sent to you when your subscription order is successfully allocated.
• A new bond issue subscription does not guarantee the allocation of the new bond issue. A successful subscription is determined by your order type (subscribe at market or limit), and more importantly market supply and demand factors that can influence the eventual allocation result and pricing of a new bond issue.

​​​​​​* Subject to change during festive season.