Disclosures & compliance

WEALTH STREET (PRIVATE) LIMITED - RISK DISCLOSURE DOCUMENT

1. This Risk Disclosure document is prescribed by the Pakistan Stock Exchange Limited (PSX) under Clause 13(1) of the Securities Broker (Licensing and Operations) Regulations, 2016.

2. This document contains important information relating to various types of risks associated with trading and investment in financial products (equity securities, fixed income instruments, derivatives contracts, etc.) being traded at PSX. Customers should carefully read this document before opening a trading account with a broker.

3. In case a customer suffers negative consequences or losses as a result of trading/investment, he/she shall be solely responsible for the same and PSX or Securities and Exchange Commission of Pakistan (SECP) shall not be held responsible/liable, in any manner whatsoever, for such negative consequences or losses.

4. Customers must acknowledge and accept that there can be no guaranteed profit or guaranteed return on their invested capital and under no circumstances can a broker provide customers such guarantee or fixed return on their investment in view of the fact that the prices of securities and futures contracts can fall as well as rise depending on market conditions and the performance of the companies. Customers must understand that past performance is not a guide to future performance of the securities, contracts, or market as a whole. In case customers have any doubt or are unclear about the risks/information disclosed in this document, PSX strongly recommends that such customers seek independent legal or financial advice in advance.

5. PSX neither singly nor jointly and expressly nor impliedly guarantees nor makes any representation concerning the completeness, accuracy, and adequacy of the information contained in this document as this document discloses the risks and other significant aspects of trading/investment at the minimum level. PSX does not provide or purport to provide any advice and shall not be liable to any person who enters into a business relationship with a broker based on any information contained in this document. Any information contained in this document must not be construed as business/investment advice in any manner whatsoever.

6. THE CUSTOMERS MUST BE AWARE OF AND ACQUAINTED WITH THE FOLLOWING:

1. BASIC RISKS INVOLVED IN TRADING IN SECURITIES MARKET

1.1 VOLATILITY RISK: Volatility risk is the risk of changes in the value of financial products in any direction. High volatility generally means that the values of securities/contracts can undergo dramatic upswings and/or downswings during a short period. Such high volatility can be expected relatively more in illiquid or less frequently traded securities/contracts than in liquid or more frequently traded ones. Due to volatility, the order of a customer may not be executed or only partially executed due to rapid changes in market prices. Such volatility can also cause price uncertainty of market orders as the price at which the order is executed can be substantially different from the last available market price or may change significantly thereafter, resulting in a real or notional loss.

1.2 LIQUIDITY RISK: Liquidity refers to the ability of market participants to buy and/or sell securities expeditiously at a competitive price and with minimal price difference. Generally, it is assumed that the greater the number of orders available in the market, the greater the liquidity. Liquidity is important because with greater liquidity, it is easier for customers to buy and/or sell securities swiftly and with minimal price difference and, as a result, customers are more likely to pay or receive a competitive price for their executed trades. Generally, lower liquidity can be expected in thinly traded instruments than in liquid or more frequently traded ones. As a result, orders of customers may only be partially executed, may be executed with relatively greater price differences, or may not be executed at all. Under certain market conditions, it may be difficult or impossible for customers to liquidate a position in the market at a reasonable price when there are no outstanding orders either on the buy side or on the sell side, or if trading is halted in a security/contract due to any reason.

1.3 SPECULATIVE TRADING RISK: Speculation involves trading a security/contract with the expectation that it will become more valuable in the very near future. These transactions aim to profit from fluctuations in the market value of securities rather than the fundamental value of a security and/or underlying attributes embodied in the securities such as dividends, bonuses, or any other factors materially affecting the price. Speculative trading results in an uncertain degree of gain or loss. Almost all investment activities involve speculative risks to some extent, as a customer has no idea whether an investment will be a blazing success or an utter failure. A day trading strategy is a common example of speculative trading in which customers buy and sell the same security/derivative within the same day, such that all obligations are netted off and closed and no settlement obligations stand. Customers indulging in a day-trading strategy need to be more vigilant and informed than customers investing for a longer period, as the market may not move during the day as the day-trader originally anticipated, resulting in a loss to them.

1.4 RISK OF WIDER SPREAD: The Bid-Ask spread is the difference between the offer price and bid price of a security/contract quoted by Market Makers or trading parties. The size of the spread is affected by several factors such as liquidity, volatility, free float (the total number of shares outstanding that are readily available for trading), etc. Generally, low liquidity, high volatility, and low free float levels of a security may result in relatively wider Bid-Ask Spreads. A higher Bid-Ask spread can result in greater costs to customers.

1.5 RISK PERTAINING TO PRICE FLUCTUATIONS DUE TO CORPORATE ANNOUNCEMENTS: Corporate announcements by issuers regarding corporate actions or any other material information may affect the price of securities. These announcements, combined with relatively lower liquidity of the security, may result in significant price volatility. Customers, while making any investment decision in such securities/contracts, are advised to take into account such announcements. Moreover, customers should be cautious and vigilant in case fake rumors are circulating in the market. Customers are advised to refrain from acting purely based on such rumors and instead make well-informed investment decisions in light of all facts and circumstances associated with such securities and their issuers.

1.6 RISK WITH REDUCING ORDERS: Customers can place orders to limit losses to certain amounts, such as Limit Orders, Stop Loss Orders, and Market Orders. Customers must ask their brokers for a detailed understanding of these order types. Customers must acknowledge that placing such orders to limit losses to a certain extent may not always be an effective tool due to rapid movements in the prices of securities, and as a result, such orders may not be executed.

1.7 SYSTEM RISK: High-volume trading frequently occurs at market opening and before market close. Such high volumes may also occur at any point in the day, causing delays in order execution or confirmation. During periods of volatility, due to market participants continuously modifying their order quantities or prices or placing fresh orders, there may be delays in order execution and its confirmations.

1.8 SYSTEMIC RISK: Systemic risk arises in exceptional circumstances and is the risk that the inability of one or more market participants to perform as expected will cause other participants to be unable to meet their obligations when due, thereby affecting the entire capital market.

1.9 SYSTEM AND NETWORKING RISK: Trading on the PSX is done electronically, based on satellite/leased line-based communications, a combination of technologies, and computer systems to place and route orders. All these facilities and systems are vulnerable to temporary disruptions or failures, or any other problems/glitches, which may lead to failure to establish access to the trading system/network. Such limitations may result in delays in processing or processing of buy or sell orders in part only or non-processing of orders at all. As with any financial transaction, customers may experience losses if orders cannot be executed normally due to system failures on the part of the exchange or broker. Losses may be greater if the broker handling customers' positions does not have adequate backup systems or procedures. Accordingly, customers are cautioned to note that although these problems may be temporary in nature, when customers have outstanding open positions or unexecuted orders, these limitations represent a risk because of obligations to settle all executed transactions.

1.10 RISK OF ONLINE SERVICES: Customers who trade or intend to trade online should fully understand the potential risks associated with online trading. Online trading may not be completely secure and reliable and may cause delays in transmitting information or executing instructions due to technological barriers. Moreover, customers acknowledge and fully understand that they shall be solely responsible for any consequences arising from the disclosure of access codes and/or passwords to any third person or any unauthorized use of access codes and/or passwords.

1.11 REGULATORY / LEGAL RISK: Government policies, rules, regulations, and procedures governing trading on the exchange are updated from time to time. Such regulatory actions and changes in the legal/regulatory ecosystem, including but not limited to changes in taxes/levies, may alter the potential profit of an investment. Some government policies may focus more on certain sectors than others, thereby affecting the risk and return profile of customers' investments in those sectors.

2. RISKS IN DERIVATIVE AND LEVERAGE PRODUCTS

Derivative and leveraged trades enable customers to take larger exposure with smaller amounts of investment as margin. Such trades carry a high level of risk, and customers should carefully consider whether trading in derivative and leveraged products is suitable for them, as it may not be suitable for all customers. The higher the degree of leverage, the greater the possibility of profit or loss it can generate in comparison with investments involving the full amount. Therefore, customers should trade in derivative and leveraged products in light of their experiences, objectives, financial resources, and other relevant circumstances. Derivative products such as Deliverable Futures Contracts, Cash Settled Futures Contracts, Stock Index Futures Contracts, and Index Options Contracts, and leveraged products such as Margin Trading System, Margin Financing, and Securities Lending and Borrowing are available for trading at the stock exchange. Customers transacting in the derivative and leveraged markets need to carefully review the agreement provided by brokers and also thoroughly read and understand the specifications, terms, and conditions, which may include markup rates, risk disclosures, etc. There are a number of additional risks that all customers need to consider while entering into derivative and leveraged market transactions. These risks include the following:

2.1 POTENTIALLY UNLIMITED LOSSES: Trading in derivative and leveraged markets involves risks and may result in potentially unlimited losses that are greater than the amount deposited with the broker. As with any high-risk financial product, customers should not risk any funds they cannot afford to lose, such as retirement savings, medical and other emergency funds, funds set aside for purposes such as education or home ownership, proceeds from student loans or mortgages, or funds required to meet living expenses.

2.2 RISKY TRADING STRATEGIES: All derivative and leveraged trading involves risk, and there is no trading strategy that can eliminate it. Strategies using combinations of positions, such as spreads, may be as risky as outright long or short positions. Trading in equity futures contracts requires knowledge of both the securities and the futures markets.

2.3 MISLEADING PROFIT CLAIMS: Customers need to be cautious of claims of large profits from trading in such products. Although the high degree of leverage can result in large and immediate gains, it can also result in large and immediate losses.

2.4 EFFECT OF LEVERAGE: Because of the leverage involved and the nature of equity futures contract transactions, customers may feel the effects of their losses immediately. The amount of initial margin is small relative to the value of the futures contract so that transactions are 'leveraged' or 'geared'. A relatively small market movement will have a proportionately larger impact on the funds customers have deposited or will have to deposit. This may work against customers as well as for them. Customers may sustain a total loss of initial margin funds and any additional funds deposited with the broker to maintain their positions. If the market moves against their positions or margin levels are increased, customers may be called upon to pay substantial additional funds on short notice to maintain their positions. If customers fail to comply with a request/call for additional funds within the specified time, their positions may be liquidated/squared-up at a loss, and customers will be liable for the loss, if any, in their accounts.

2.5 DIFFICULTY IN LIQUIDATING POSITIONS: Customers may find it difficult or impossible to liquidate/square-up a position due to certain market conditions. Generally, customers enter into an offsetting transaction to liquidate/square-up a position in a derivative or leveraged contract or to limit the risk. If customers cannot liquidate positions, they may not be able to realize a gain in the value of their positions or prevent losses from increasing. This inability to liquidate could occur, for example, if trading is halted due to some emergency or unusual event in either the equity futures contract or the underlying security, or if no trading occurs due to the imposition of circuit breakers or system failures by the exchange or broker handling customers' positions. Even if customers can liquidate positions, they may be forced to do so at a price that involves a large loss.

2.6 PRICE DISPARITIES: Under certain market conditions, the prices of derivative contracts may not maintain their customary or anticipated relationships to the prices of the underlying securities. These pricing disparities could occur, for example, when the market for the equity futures contract is illiquid, when the primary market for the underlying security is closed, or when the reporting of transactions in the underlying security has been delayed.

2.7 PHYSICAL DELIVERY OBLIGATIONS: Customers may be required to settle certain futures contracts with physical delivery of the underlying security. If customers hold positions in physically settled equity futures contracts until the end of the last trading day prior to expiration, they shall be obligated to make or take delivery of the underlying securities, which could involve additional costs. Customers should carefully review the settlement and delivery conditions before entering into an equity futures contract.

2.8 SPECIAL RISKS FOR DAY TRADING: Day trading strategies involving equity futures contracts and other products pose special risks. As with any financial product, customers who seek to purchase and sell the same equity futures in the course of a day to profit from intra-day price movements ("day traders") face a number of special risks, including substantial commissions, exposure to leverage, and competition with professional traders. Customers should thoroughly understand these risks and have appropriate experience before engaging in day trading. Customers should obtain a clear explanation of all commissions, fees, and other charges for which they will be liable. These charges will affect net profit (if any) or increase loss.

3. GENERAL

3.1 ASSETS HELD WITH BROKERS: Customers should familiarize themselves with the measures available to protect against the risk of misappropriation or misuse of cash and securities held with brokers. For such purposes, customers may opt for the UIN Information System (UIS) provided by National Clearing Company of Pakistan Limited (NCCPL). Customers should also provide correct mobile numbers/email addresses to receive SMS/eAlerts services provided by NCCPL and Central Depository Company of Pakistan Limited (CDC) on each trade and movement of their securities. Moreover, customers should be aware of the protections given to money and securities deposited with brokers, particularly in the event of a default by such broker or the broker's insolvency or bankruptcy. Customers recognize that in such default/insolvency/bankruptcy scenarios, they may recover their money and/or property to the extent governed by relevant PSX Regulations and/or local laws in force from time to time.

3.2 CUSTOMERS' RIGHTS AND OBLIGATIONS: Customers must understand their rights and obligations as well as the rights and obligations of the brokers specified under the PSX Regulations and the Standardized Account Opening Form, Know Your Client Form, Standardized Sub-Account Opening Form of CDC, and Agreement(s) of Leveraged Products (Margin Trading System, Margin Financing, and Securities Lending and Borrowing), where applicable, and any other applicable Rules, Regulations, Guidelines, Circulars, etc., as may be issued by SECP and PSX from time to time. Customers' Rights and Obligations include:

• (a) Dealing Through Registered Channels: Customers should ensure that they deal through the registered branch and with the registered Agents/Traders/Representatives of the broker. Customers shall also verify such details from the PSX website and Jamapunji (www.jamapunji.pk).
• (b) Understanding Fees and Charges: At the time of establishing a relationship with brokers, customers should obtain a clear explanation of all brokerage, commission, fees, and other charges for which they will be liable. These charges will affect net cash inflow or outflow.
• (c) Receipt of Contract Notes: It is obligatory for brokers to issue a contract note, in either electronic form or hard copy, by the next working day of trading. The contract note shall contain all information relating to trade execution, including commission and charges applicable to the customers. In case a contract note is not issued, customers should inquire with the broker immediately and, if the matter is not resolved, report the same to the PSX.
• (d) Matching Contract Notes with Alerts: Customers should match the information in the contract notes with the SMS/e-Alerts received from CDC and/or NCCPL and may also verify through the UIS facility available on the NCCPL website.

1. PREAMBLE

This policy document has been prepared in line with guidelines issued by SECP (Apex Capital Market Regulator), PSX (Stock Market Regulator) and Wealth Street (Pvt) Ltd Compliance Standards, FATF recommendations and international practices. It incorporates the WS approach to customer identification, customer profiling based on the risk assessment and monitoring of transactions on an ongoing basis. The policy primarily aligns the Wealth Street (Pvt) Ltd (hereinafter referred to as WS) with Regulatory requirement.

2. PURPOSE OF POLICY

The primary purpose of the Compliance Policy is to establish a strong compliance culture within WS, by providing a framework of guidelines. This policy introduces and defines the KYC/AML guidelines, which will allow appropriate management of money laundering & terrorist financing risks and discharging its responsibilities relating to regulatory requirements. Responsibility for ensuring Compliance with this policy rests with all employees of WS. They must act prudently and vigilantly when assessing prospective customers, handling customer requests and processing customer regular or one-off transactions. With commitment and determination, it is possible to translate the business principles into daily practice, continue to protect the integrity of the Capital Market system and maintain WS reputation as a respectable and trustworthy institution.

3. SCOPE OF POLICY

This policy is applicable to Wealth Street (Pvt) Ltd business and operations and all staff (Regular, Contractual, Consultant, etc.). Efforts are made to cover all applicable local regulations. All staff must ensure that they have read and understood the contents of the policy, SECP and PSX Regulations and applicable local laws.

Below are key areas that this KYC/CDD policy covers:

• a. Customer Acceptance
• b. Customer Identification
• c. Verification of Customer Identity
• d. Risk assessment of customer
• e. Sanction/blacklist Filtration
• f. Circumstances where Enhanced Due Diligence is required
• g. On-going Due Diligence
• h. Circumstances where simplified Due Diligence can be adopted
• i. Compliance function
• j. Record Retention
• k. Training and employee screening
• l. Suspicious Transaction Report

a. Customer Acceptance

WS shall not open an Account and/or maintain Business Relation of/with the following:

• Anonymous accounts;
• Account in the name of fictitious persons;
• Blacklisted by a regulatory body;
• Unregistered Money Changers;
• Shell Banks;
• Foreign PEPs;
• Sanctioned Entity / Individual (i.e. Specially Designated National);
• Government Accounts in the personal names of government official(s); (Any such account, which is to be operated by an officer of the Federal/Provincial/Local Government in his/her official capacity, shall be opened only on production of a special resolution/authority from the concerned administrative department duly endorsed by the Ministry of Finance or Finance Department of the concerned Government);
• Doubtful Identity;
• High net worth customers with no clearly identifiable source of income;
• Where compliance officer has strong reason to believe that Account may be used for scams;
• Account should not be opened of NPO/NGO where the title is not as per its constituent documents;
• Where WS have strong reason(s) to believe that the Account/Business Relationship will expose the institution to Money Laundering, and reputational Risks;
• Business relationships with any individuals or undertakings which it knows, or is expected to know, constitute a terrorist or criminal organization, or which are affiliated to, or support or finance such an organization;
• Residents of prohibited countries as per group directives (Afghanistan, Belarus, Cuba, Eritrea, Iran, North Korea, Syria).

b. Customer Identification

a. It is a basic principle of any business to know who its customers are. This helps us protect ourselves from being used by unscrupulous and/or criminal elements. In this regard, WS will take all reasonable care to establish the true identity of customers. WS shall obtain the minimum information / set of documents from various types of Customers, detail of which are as follows:

1. Individuals / Sole Proprietorship - Information required: Name and Father's Name; Address; Telephone Number(s); Sources of Income; Nationality & NTN; Guardian name (if applicable). Documents required: Copy of CNIC or passport or attested copy of B form in case of Minor; Detail of Business / Employment Proof; Zakat Exemption Certificate (if applicable); Guardian Certificate (if applicable).
2. Partnership based entity - Information required: Name of Partnership Entity; Names of Partners; Father's Name of Partners; Address of Partnership entity; Telephone Number(s). Documents required: Copy of CNIC / passport of all Partners; Copy of CNIC of authorized signatories; List of Authorized signatories along with power of attorney; Resolution authorizing investments; Copy of latest financials of partnership.
3. Companies (Institutional and Corporate) - Information required: Name of Company and its Directors; Registered Address; Telephone number(s); Contact persons; Registered number & NTN. Documents required: Copy of CNIC / passport of all Directors; Audited Accounts of the company; Memorandum and Article of Association; Board Resolution authorizing investments; Certificate of Incorporation / Commencement of Business; List of Authorized Signatories along with copy of CNICs and power of attorney.
4. Clubs, Societies and Associations - Information required: Name of Club, Society or Association; Registered address of Club, Society or Association; Telephone number(s); Contact Persons. Documents required: Board / Governing Body Resolution for investment; Certified copy of bylaws / rules and regulations; Copy of CNIC of Board's members; Certified copy of certificate of Registration; List of Authorized Signatories along with copy of CNICs and power of attorney; Copy of latest financials.
5. Trusts (including, but not limited to, Provident Fund, Gratuity Fund, Pension Fund, mutual fund, etc.) - Information required: Name of trust, Fund etc.; Name of Trustee; Address of Trust / Fund etc.; Telephone number(s); Contact persons. Documents required: Copy of CNIC of all Trustees; Certified copy of Trust Deed; Trustee / Governing body Resolution for investment; Copy of the latest financials of the Trust; List of Authorized Signatories along with copy of CNICs and power of attorney.
6. Executors and Administrators - Information required: Name of Entity for which Executor / Administrator is appointed; Name of Executor / Administrator; Address of entity & Telephone Numbers. Documents required: Copy of CNIC of Executor / Administrator; Certified copy of the letter of Administration.
7. Government Entities - Information required: Name of Government owned organization; Address of Government owned organization; Telephone numbers; Contact persons. Documents required: A Special Resolution / authority endorsed by the Ministry of Finance or Finance Department from concerned Government (Federal / Provincial / Local) clearly listing the persons / officers authorized to operate such account; List of Authorized Signatories; Copy of CNIC of authorized officer(s); Resolution authorizing investment.

b. It is important to recognize if a customer is acting on behalf of another person. If this is the case, then the identity of that person should be ascertained and relevant documents of that person need to be obtained also. Beneficial Ownership must be identified for each account.

c. For non-individual customers (e.g. companies, pension funds, government owned entities, nonprofit organizations, foreign companies/organizations) additional care will be taken to establish the ownership and control structure of such an organization and who (i.e. person(s)) actually owns the organization and who manages it. WS will verify that the person who represents himself as authorized signatory with powers to open and operate the brokerage account is actually authorized by the organization.

d. WS will make sure and be careful that accounts of Institutions / organizations / corporate bodies are not opened in the name of employee(s)/official(s) because of sensitive nature of public sector (government) entities and risk of potential conflict of interest or embezzlement.

e. It is not the policy of WS to receive any payment through cash. All receipts/payments are made through cross-cheques, bank drafts, pay-orders or other crossed banking instruments, online transfer deposited in the EClear's Bank Account. Further, amount will be received only in the name of the account holder.

f. New and any prospective customer who wants to open brokerage account and in the case of nonresident/overseas customers or customers in other cities where the WS does not have a branch/office, customer can access broker's website and select the option to open an account. Customer fills out form and agrees to terms and conditions.

c. Verification of Customer Identity

Verification is an integral part of CDD/KYC measures for which WS is required to ensure the following areas:

• I. Before opening an account, the COO should conduct a due diligence screening for every client. After approval, the process of opening the account will begin.
• II. In case of physical form before opening an account, WS shall verify the signature of the account holder is verified from the bank in Sub Account Opening Form.
• III. WS will maintain list of all such customers / accounts where business relationship was refused or needed to be closed on account of negative verification, as required under Regulation 6(9) of SECP (AML/CFT) Regulation.

d. Risk Assessment of Customer

All customers are classified as low, medium or high risk profile. This risk assessment has to be done on the basis of information obtained at the time of Client account opening and has to be updated on the basis of information obtained during the relationship and doing business with the customer. It will be based on customer's identity, nature of income, source of funding, location/domicile of customer, etc. Following customers will be classified as HIGH RISK and require Enhanced Due Diligence before establishing the account relationship:

• i. Non-resident customers;
• ii. Legal persons or arrangements including non-governmental organizations (NGOs) / not-for-profit organizations (NPOs) and trusts / charities;
• iii. Customers belonging to countries where CDD/KYC and anti-money laundering regulations are lax or if funds originate or go to those countries;
• iv. Customers whose business or activities present a higher risk of money laundering such as cash based business;
• v. Customers with links to offshore tax havens;
• vi. There is reason to believe that the customer has been refused brokerage services by another brokerage house;
• vii. Non-face-to-face / on-line customer;
• viii. Establishing business relationship or transactions with counterparts from or in countries not sufficiently applying FATF recommendations; and
• ix. Politically Exposed Persons (PEPs) or customers holding public or high profile positions;
• x. Accounts of Exchange Companies / Exchange members;
• xi. Real Estate Dealers;
• xii. Dealers in Precious metals and stones;
• xiii. Lawyers / Notaries;
• xiv. Body corporate, partnerships, associations and legal arrangements including nongovernmental organizations or not-for-profit organizations which receive donations.

"Politically Exposed Persons" (PEPs) also fall under HIGH RISK CATEGORY. These generally include individuals in prominent positions such as senior politicians, senior government, judicial or military officials; senior executives of State Corporations AND their family members and close associates. These individuals present reputational risk and potential conflict of interest and extra caution is required when opening their brokerage account and monitoring their account activity. The above definition is not intended to cover middle ranking / junior officials in above noted categories.

e. Sanction/Blacklist Filtration

Certain countries face extensive financial sanctions and trade embargoes. For these countries, the following approach will be required:

• i. No accounts can be maintained for National / Residents of Iran, Syria & North Korea (D.R.N.K);
• ii. No accounts can be maintained for companies incorporated in above mentioned countries;
• iii. No remittances from/to these countries are permitted;
• iv. Existing clients must be screened on every updating of sanction list;
• v. On becoming aware of any proscribed person, WS will take appropriate actions such as freezing the funds and assets and reporting to Commission, as required under Regulation 13(7) of the SECP (AML/CFT) Regulation.

f. Circumstances where Enhanced Due Diligence is required

Once a customer has been categorized as HIGH RISK, WS will conduct Enhanced Due Diligence (EDD) when dealing with such a customer. Activities and transactions of HIGH RISK customers are monitored. When dealing with high-risk customers, including Politically Exposed Persons (PEPs), the CEO and the compliance head would approve the opening of brokerage account. In the case of HIGH RISK CATEGORY customers, it is important to determine the source of wealth and funds being invested. If an existing customer falls into the HIGH RISK CATEGORY, the requirements mentioned in these policy guidelines for monitoring and reporting suspicious transactions and senior management approval for continuing with the customer will also apply to such customer(s).

g. On-going Due Diligence

Customer Due Diligence (CDD) is not a one-time exercise that is conducted at the time of account opening only. In order to guard against misuse of their good offices against criminal transactions Compliance officer of WS will be vigilant at all the times, and keep monitoring transactions of their customers to ensure that the transactions executed in any particular account are within defined customer's profile, risk category, historical pattern of the transactions and as per their source of funds. For example, if a domestic individual customer orders a transaction that is significantly different from the average historical transaction size, the Compliance Officer has to be alert and be satisfied that no suspicious reportable activity has taken place and activity is in line with customer profile. Similarly, if a regular domestic customer, all of a sudden shows foreign un-identified sources of funds, this is likely to require further investigation.

WS will keep all customer records updated. All high risk accounts to be reviewed at least on the Annual basis to assess and ensure customer records/information is updated; other accounts will be reviewed if activity is captured during activity monitoring or at least once in 3 years.

h. Circumstances where simplified Due Diligence can be adopted

It is acceptable for WS to apply simplified or reduced CDD measures in the following circumstances:

• a) Risk of money laundering or terrorist financing is lower;
• b) Information on the identity of the customer and the beneficial owner of a Customer is publicly available;
• c) Adequate checks and controls exist.

Accordingly, following customers may be considered for simplified or reduced CDD:

• Financial institutions which are subject to requirement to combat money laundering and terrorist financing consistent with the FATF recommendations and are supervised for compliance with those controls;
• Public companies that are subject to regulatory disclosure requirements;
• Government administrations or enterprises.

Simplified CDD should not be followed when there is an identified risk of money laundering or terrorist financing.

i. Compliance Head

Compliance Head will report to the Board of Directors. It is the responsibility of the compliance head to ensure that KYC/CDD guidelines are being complied with as well as with regulatory requirements. This includes maintaining record of violations / non-compliance identified during the normal course of business. These incidents have to be reported to the Board of Directors. Any such record has to be available for inspection by SECP and PSX as and when required.

j. Record Retention

All data relating to KYC/CDD guidelines & procedures have to be maintained for a minimum of five years after the business relationship is ended, including identity of the customer(s) (e.g. copies or records of official identification documents like passports, identity cards, driving licenses or similar documents), account files and correspondence exchanged with the customer(s).

k. Training and employee screening

Annual training of WS Staff on AML/KYC and regulatory issues to ensure that they understand their duties under KYC/CDD and are able to perform those duties satisfactorily.

l. Suspicious Transaction Report

WS shall file Suspicious Transaction Report, conducted or attempted by, WS knows, suspects, or has reason to suspect that the transaction or a pattern of transactions of which the transaction is a part:

• (a) Involves funds derived from illegal activities or is intended or conducted in order to hide or disguise proceeds of crime;
• (b) Has no apparent lawful purpose after examining the available facts, including the background and possible purpose of the transaction;
• (c) Or; Involves financing of Terrorism;
• (d) Any unusual transactions that cannot be justified by the customer are reported in a Suspicious Transaction Report (STR).

If customer is unable to fulfill the KYC/CDD requirement mentioned in the policy, account relationship should not be established and if deemed necessary, WS may also consider filing a Suspicious Transactions Report (STR). In case an existing customer falls into HIGH RISK CATEGORY and customer is unable to fulfill the requirements of this policy guideline, such account should be closed and if deemed necessary a Suspicious Transaction Report filed.

Account should not be opened if the verification of the identity of the customer / beneficial owner of the account is not positive or a positive link is identified with the proscribed entities or persons, or if it is unclear what the purpose and intention of customer is, and filing an STR be considered. If there are any such existing accounts they should be closed and a Suspicious Transaction Report (STR) be filed.

m. Internal Audit

WS has in place effective and operationally independent internal audit and compliance functions having appropriately trained and competent staff; and WS ensures that a periodic or annual review of the internal control system and assessment of overall level of compliance of the securities broker is carried out by the internal audit function, which reports directly to the board of directors or its audit committee.

Customer Complaints Handling and Resolution

1.1 Policy Statement: The policy of Wealth Street Private Limited is to ensure that all customer complaints are handled promptly, fairly, and efficiently, in compliance with the Pakistan Stock Exchange (PSX) and the Securities and Exchange Commission of Pakistan (SECP) regulations.

1.2 Procedures - a. Receipt of Complaints:

• Accept complaints through email (complaints@wealthstreet.com.pk), phone, in-person visits, and written communication.
• Log all complaints into the central complaints management system immediately upon receipt.

b. Acknowledgement of Complaints:

• Acknowledge receipt of the complaint within 24 hours, providing a complaint reference number and expected resolution timeframe.

c. Investigation of Complaints:

• Assign a designated officer or team to investigate.
• Gather all relevant information and documentation.
• Conduct interviews with relevant parties if necessary.

d. Resolution of Complaints:

• Analyze the information to identify the root cause.
• Determine and implement corrective actions.
• Communicate the resolution to the complainant, detailing the actions taken.

e. Escalation of Complaints:

• Escalate unresolved complaints to a higher authority within the firm.
• Inform the complainant about the escalation and provide an updated resolution timeline.

f. Closing the Complaint:

• Inform the complainant in writing once the complaint is resolved.
• Document the resolution and closure in the complaints management system.

1.3 Systems:

• Implement a centralized complaints management system to log, track, and manage complaints.
• Provide multiple channels for complaint submission (email, phone, physical office).

1.4 Controls:

• Conduct regular audits of the complaints handling process.
• Provide regular training on the complaints handling process.
• Periodically review the process to ensure compliance with PSX and SECP regulations.

2. Conflict Management

2.1 Policy Statement: Wealth Street (Private) Limited is committed to identifying, managing, and resolving conflicts of interest to maintain the integrity and trust of our clients, in accordance with SECP regulations.

2.2 Procedures - a. Identification of Conflicts:

• Identify potential conflicts of interest through regular risk assessments and staff disclosures.

b. Management of Conflicts:

• Establish clear guidelines for managing identified conflicts.
• Implement a conflicts register to document and monitor conflicts.

c. Resolution of Conflicts:

• Develop procedures for resolving conflicts fairly and transparently.
• Provide mechanisms for escalating unresolved conflicts.

2.3 Systems:

• Maintain a conflicts register.
• Ensure regular staff training on conflict identification and management.

2.4 Controls:

• Regular monitoring and assessment of conflict management practices.
• Conduct periodic reviews to ensure alignment with SECP regulations.
• Implement internal audit checks on conflict management processes.

3. Monitoring Unethical Conduct

3.1 Policy Statement: Wealth Street (Private) Limited is committed to fostering a culture of ethical behavior and integrity, with zero tolerance for unethical conduct and market abuse, as mandated by SECP.

3.2 Procedures - a. Identification of Unethical Conduct:

• Establish clear guidelines for identifying unethical conduct and market abuse.
• Implement reporting mechanisms for suspected unethical behavior.

b. Monitoring and Surveillance:

• Utilize surveillance and monitoring tools to detect suspicious activities and transactions.
• Conduct regular internal audits to identify potential unethical conduct.

c. Addressing Unethical Conduct:

• Develop procedures for investigating and addressing unethical conduct.
• Implement disciplinary actions for confirmed cases of unethical behavior.

3.3 Systems:

• Deploy surveillance and monitoring tools.
• Establish a whistleblower program to report unethical conduct.

3.4 Controls:

• Conduct regular training on ethical standards and market abuse.
• Regularly update policies to reflect changes in regulations and best practices.
• Perform ongoing monitoring and compliance checks to ensure adherence to ethical standards.

Documentation and Record Keeping

• Maintain detailed records of all complaints, conflicts, and cases of unethical conduct.
• Ensure secure and accessible storage of records for regulatory inspections and audits.

Continuous Improvement

• Encourage customer and staff feedback on the complaints handling, conflict management, and ethical conduct monitoring processes.
• Use feedback to make continuous improvements to these processes.

Compliance Review

• Regularly review all policies, procedures, systems, and controls to ensure they remain up-to-date with SECP and PSX regulations.
• Implement necessary changes based on review findings and regulatory updates.

These policies, procedures, systems, and controls are designed to ensure that Wealth Street Pvt Limited handles and resolves customer complaints, manages conflicts of interest, and monitors unethical conduct efficiently, fairly, and in compliance with PSX and SECP regulations, thereby maintaining high standards of customer service and operational integrity.

Do's

1. Verify the authenticity of a Broker and its branches from the list of registered brokers and branches available on PMEX website (https://www.pmex.com.pk/existing-trec-holders/).
2. Do your research before deciding to invest your money in the futures market.
3. Carefully read and understand the terms and conditions along-with Risk Disclosure Document.
4. Ensure that all information is accurately filled in the Account Opening Form and a signed copy of the form is retained for future reference.
5. In case of any change in information provided in the Account Opening Form, immediately communicate in writing to Broker.
6. Only deposit payments to PMEX as per Automated Direct Funds Model through cross cheque/Pay Order/RTGS (Over the Counter - OTC) or online transfer (Sub-Collection Account - SCA) from your own bank account registered with PMEX.
7. Ensure that Broker sends daily, weekly, monthly account balance and activity statements to know the trade activity and cash balances in the trading account.
8. Ensure that SMS alerts for deposits, withdrawals and trades are received on mobile number registered with PMEX.
9. Approach PMEX in case of any complaint that remains unresolved by the Broker.

Don'ts

1. Do not deal with Brokers or their branches not registered with PMEX.
2. Do not give wrong, contradictory or incomplete information in the Account Opening Form.
3. Do not give cash or issue cross cheque, pay order, demand draft or any other instrument in the name of Broker, or any of its employee/authorized representative.
4. Do not deposit payments in cash in your account.
5. Do not deposit payments through third party cheque or online transfer from third party account.
6. Do not get misled by alluring advertisements, rumors, hot tips or the promises of assured returns by the Brokers or their authorized representatives.
7. Do not invest/deposit more funds than you can afford to lose.
8. Do not share personal ID and password of trading account provided by the Exchange with the Brokers or their authorized representatives.
9. Do not execute any trade on advice/direction of the Broker or any of its employee/authorized representative.
10. Do not enter incorrect information while filling out deposit slip (Over the Counter - OTC) or adding Sub-Collection Account (Online Transfer) during funds deposit. Any claim due to any error by the customer or banks shall not be considered/entertained by PMEX.
11. Do not surrender the right of receiving cash and trade balances reports via email and SMS.
12. Do not start trading before reading and understanding the terms and conditions and Risk Disclosure Document.
13. Do not give deposit by whatever name called, to any Broker or any of its employee/authorized representative against fixed or guaranteed returns on deposits as the same is illegal and any claim in respect of such deposits would not be considered/entertained by PMEX.

This document should be read by each and every prospective client before entering into commodity futures trading and should be read in conjunction with regulations of Pakistan Mercantile Exchange Limited ("PMEX"). This document does not disclose all of the risks and other significant aspects of trading. In light of the risks, you should undertake such transactions only if you understand the nature of the Futures Contracts (and contractual relationships) into which you are entering and the extent of your exposure to risk.

The risk of loss in trading in Commodity Futures Contracts can be substantial. You should carefully consider whether trading is appropriate for you in light of your experience, objectives, financial resources, and other relevant circumstances. Futures trading thus requires not only the necessary financial resources but also the financial and emotional temperament. In case of any consequences or loss in the Futures segment, the client shall be solely responsible for such loss, and the Exchange shall not be responsible for the same. It will not be open for any client to take the plea that no adequate disclosure was made, or that they were not explained the full risk involved by the broker. The client will be solely responsible for the consequences, and no contract can be rescinded on that account.

RISKS INVOLVED IN TRADING IN FUTURES CONTRACTS

Effect of "Leverage" or "Gearing": The amount of margin is small relative to the value of the Commodity Futures Contract, so the transactions are "leveraged" or "geared." Commodity Futures trading, which is conducted with a relatively small amount of margin, provides the possibility of great profit or loss in comparison with the principal investment amount. But transactions in Futures carry a high degree of risk. You should therefore completely understand the following statements before actually trading in Commodity Futures Contracts and also trade with caution while taking into account your circumstances, financial resources, etc. If the prices move against you, you may lose part of or the whole margin equivalent to the principal investment amount in a relatively short period of time. Moreover, the loss may exceed the original margin amount.

I. Commodity Futures trading involves daily settlement of all positions. Every day, the open positions are marked to market based on the Settlement price. If the settlement price has moved against you, you will be required to deposit the amount of loss (notional) resulting from such movement. This margin will have to be paid within a stipulated time frame, generally before the commencement of trading the next day.

II. If you fail to deposit mark-to-market losses and additional margin by the deadline, or if an outstanding debt occurs in your account, the Broker may, without any further notice to the Client, liquidate part of, or the whole position, in order to bring the margin to the required level. In this case, you will be liable for any losses incurred due to such closeouts.

III. Under certain market conditions, an investor may find it difficult or impossible to execute transactions. For example, this situation can occur due to factors such as illiquidity, when there are insufficient bids or offers, or suspension of trading due to price limits or circuit breakers.

IV. In order to maintain market stability, the following steps may be adopted: changes in the margin rate, increases in the cash margin rate, or others. These new measures may be applied to the existing open interests. In such conditions, you will be required to put up additional margins or reduce your positions.

V. You must ask your Broker to provide the full details of the Commodity Futures Contracts you plan to trade, i.e., the contract specifications and the associated obligations, and ensure that your Broker takes no positions without your express written authorization if you deem it necessary.

Risk-reducing orders or strategies

The placing of certain orders (e.g., "stop-loss" orders or "stop-limit" orders), which are intended to limit losses to certain amounts, may not be effective because market conditions may make it impossible to execute such orders. Strategies using combinations of positions, such as "spread" positions, may be as risky as taking simple "long" or "short" positions.

Suspension or restriction of trading and pricing relationships

Market conditions (e.g., illiquidity) and/or the operation of the rules of certain markets (e.g., the suspension of trading in any contract or contract month because of price limits or "circuit breakers") may increase the risk of loss due to the inability to liquidate/offset positions.

Deposited cash and property

You should familiarize yourself with the protections accorded to the money or other property you deposit, particularly in the event of firm insolvency or bankruptcy. The extent to which you may recover your money or property may be governed by specific legislation or local rules. In some jurisdictions, property that has been specifically identifiable as your own will be pro-rated in the same manner as cash for purposes of distribution in the event of a shortfall. In case of any dispute with the Broker, the same shall be subject to arbitration as per the Regulations of the Exchange.

Commission and other charges

Before you begin to trade, you should obtain a clear explanation of all commissions, fees, and other charges for which you will be liable. These charges will affect your net profit (if any) or increase your loss.

Trading facilities

The Exchange offers electronic trading facilities, which are computer-based systems for order routing, execution, matching, registration, or clearing of trades. As with all facilities and systems, they are vulnerable to temporary disruption or failure. Your ability to recover certain losses may be subject to limits on liability imposed by the system provider, the market, the clearinghouse, and/or Broker firms. Such limits may vary; you should ask the firm with which you deal for details in this respect.