Cmglobals AU PTY LTD Target Market Determination for OTC Derivatives

Issuer	CM (AUST) PTY LTD
Product	OTC Derivatives
Date of TMD	September 2023

Introduction

This is a target market determination (“TMD”) for the purposes of section 994B of the Corporations Act 2001 (Cth) (“Corporations Act”) in respect of over-the-counter derivatives (“OTC Derivatives”) issued by CM (AUST) PTY LTD (“Cmglobals”, “we”, “us”, “our”).

Cmlgobals issues OTC Derivatives in the form of contracts for difference (“CFDs”) and margin foreign exchange (“Margin FX”) contracts. Collectively, these are referred to as OTC Derivatives in this TMD.

This TMD applies to retail clients only (“Investors”).

You should also refer to the relevant Product Disclosure Statement (“PDS”) and any other legal documents on our website before deciding whether to acquire or continue to hold OTC Derivatives.

You may also consider seeking independent advice before deciding to trade OTC Derivatives.

The contents of this TMD are general information only and it's up to you to make sure the products that we offer suit your specific needs.

Product Summary

Investor Types

OTC Derivatives are leveraged financial products which are traded over-thecounter and not through a regulated market.

An OTC Derivative is an agreement to exchange the difference in the value of an underlying asset from the time a contract is opened until the time at which it is closed. An Investor does not take physical delivery of the underlying asset and there is no exchange of one currency or underlying asset for another.

OTC Derivatives are subject to significant risks, including:

Leverage: OTC Derivatives are leveraged products. Leverage enables an Investor to gain larger exposure to a financial market while only tying up a small amount of capital. Trading with leverage means that even a small change in the market could magnify the scope for both profits and losses.
Volatility: Derivative markets generally can be highly volatile (i.e. they move up and down in value quite quickly) so the risk that an Investor will incur losses when they trade OTC Derivatives can be substantial. Note: mandatory negative balance protection ensures that retail clients cannot lose more than the amount deposited.
Risk of Close Out: An Investor must meet margin requirements to trade OTC Derivatives with us. This means the Investor will need to deposit enough money into their account as margin for new and existing positions and monitor their margin requirements for any open positions. An Investor risks being closed out if they don’t have enough margin on their account.
Holding Costs: Depending on the positions held and how long they are held for, an Investor may incur holding costs. In some cases the sum of these holding costs may exceed the amount of any profits, or they could significantly increase losses.
Counterparty Risk: Cmglobals is the issuer of OTC Derivatives subject to this TMD. This means that the Investor is dealing with Cmglobals as the counterparty to every transaction. Accordingly, the Investor is exposed to the financial and business risks of trading with Cmglobals.

Refer to our PDS for further details in relation to risks associated with OTC Derivatives.

Product Overview

Target Market for OTC Derivatives	Investors for whom this product may be unsuitable for
OTC Derivatives are often traded for different purposes and with different strategies. We consider that the target market for OTC Derivatives is an Investor who falls into one (or more) of the categories below, noting there may also be some overlap between categories: Investors who appreciate and understand the high risk of trading with leverage and in potentially volatile market conditions: seeking to make a profit via speculation and willing to accept losses up to their invested capital. Investors who use the product for risk mitigation: seeking to hedge potential risks from other investments. It is sufficient for an Investor to fall within one of the categories to be within the target market for OTC Derivatives.	OTC Derivatives will generally not be suitable for: Investors who have not passed Cmglobals Client Qualification criteria; Investors seeking regular or otherwise predictable returns on their investments; Investors who cannot afford losses up to their invested capital without a material impact on their standard of living; Investors who do not understand the risks of trading CFDs; or Investors who have a low risk tolerance other than those who wish to use OTC Derivatives to hedge existing investments.

Target Market for OTC Derivatives

Investors for whom this product may be unsuitable for

OTC Derivatives are often traded for different purposes and with different strategies. We consider that the target market for OTC Derivatives is an Investor who falls into one (or more) of the categories below, noting there may also be some overlap between categories:

Investors who appreciate and understand the high risk of trading with leverage and in potentially volatile market conditions: seeking to make a profit via speculation and willing to accept losses up to their invested capital.
Investors who use the product for risk mitigation: seeking to hedge potential risks from other investments.

It is sufficient for an Investor to fall within one of the categories to be within the target market for OTC Derivatives.

OTC Derivatives will generally not be suitable for:

Investors who have not passed Cmglobals Client Qualification criteria;
Investors seeking regular or otherwise predictable returns on their investments;
Investors who cannot afford losses up to their invested capital without a material impact on their standard of living;
Investors who do not understand the risks of trading CFDs; or
Investors who have a low risk tolerance other than those who wish to use OTC Derivatives to hedge existing investments.

Likely objectives, financial situation and needs of retail clients in the target market

We expect that trading in OTC Derivatives will likely be consistent with the likely objectives, financial situation and needs of Investors who appreciate and understand the high risk of trading with leverage and in potentially volatile market conditions and/or Investors who want to use the product for risk mitigation given the varied ways and purposes for which OTC Derivatives can be traded.

Target Market Category	Explanation of why OTC Derivatives are likely to be consistent with the likely objectives, financial situation and needs of the target market
1. Investors who appreciate and understand the high risk of trading with leverage and in potentially volatile market conditions	a. Likely objective: To use leverage in order to seek higher returns while accepting high risks b. Likely financial situation: Have disposable capital to use which would not materially impact their lifestyle should they lose these funds c. Likely needs: Investors who want to use disposable capital to make enhanced returns
2. Investors who use the product for risk mitigation	a. Likely objective: To protect previous gains or mitigate against future losses b. Likely financial situation: Investors who have existing or upcoming investments or exposures they wish to hedge c. Likely needs: Loss or profit protection

OTC Derivatives can be a cost-effective way for Investors to speculate on the price movement of an underlying asset which might otherwise not be available to them.

OTC Derivatives are also highly regulated and have many protections for Investors, including:

Client qualification criteria
Leverage restrictions
Mandatory negative balance protection
Prohibited incentives

Distribution Conditions

Distribution conditions, restrictions and reasons why these are appropriate
Any distribution of OTC Derivatives by Cmglobals will be in accordance with procedures that we determine are reasonably likely to ensure that OTC Derivatives are issued to Investors who are reasonably likely to be within our target market. These procedures include: distribution of OTC Derivatives will only occur in accordance with the Client Qualification criteria specified by Cmglobals; Cmglobals will take steps to reasonably ensure that the distribution procedures target Investors who fall within the identified target market; in line with our marketing strategy, Cmglobals selects its distribution criteria depending on the medium used; and with respect to distribution by third parties, Cmglobals has: taken steps to identify referrers whose usual activities are consistent with our distribution strategy; or informed third party referrers of our TMD and the need to establish, implement and maintain appropriate procedures, processes and controls with a view to ensuring that OTC Derivatives are distributed in accordance with this TMD.

Distribution conditions, restrictions and reasons why these are appropriate

Any distribution of OTC Derivatives by Cmglobals will be in accordance with procedures that we determine are reasonably likely to ensure that OTC Derivatives are issued to Investors who are reasonably likely to be within our target market.

These procedures include:

distribution of OTC Derivatives will only occur in accordance with the Client Qualification criteria specified by Cmglobals;
Cmglobals will take steps to reasonably ensure that the distribution procedures target Investors who fall within the identified target market;
in line with our marketing strategy, Cmglobals selects its distribution criteria depending on the medium used; and
with respect to distribution by third parties, Cmglobals has:
- taken steps to identify referrers whose usual activities are consistent with our distribution strategy; or
- informed third party referrers of our TMD and the need to establish, implement and maintain appropriate procedures, processes and controls with a view to ensuring that OTC Derivatives are distributed in accordance with this TMD.

Review Triggers

Cmglobals will also review the TMD where the following review triggers occur as they may suggest that the TMD is no longer appropriate:

we become aware of a significant issuance of OTC Derivatives to Investors outside our target market;
material changes to the OTC Derivative products result in the key attributes of the product being no longer consistent with the likely objectives, financial situation and needs of Investors in the target market;
material changes to law or regulation affecting OTC Derivatives;
we become aware of a significant volume of complaints from Investors in relation to the product;
we have a material change in the distribution conditions which makes it unlikely that Investors who are issued OTC Derivatives are in the target market;
where a distributor has reported a significant number of complaints or noted any relevant complaint trends; or
any other relevant event or circumstance that would materially change a factor taken into account in making this TMD for OTC Derivatives.

Periodic Reviews

Reviews of the TMD will be annual, or more frequently if a review trigger occurs, commencing on the anniversary of the TMD and finishing within 4 months of that date. The first review of this TMD was triggered in September 2023.

Reporting Requirements

The following information must be provided to Cmglobals by distributors who engage in retail product distribution conduct in relation to OTC Derivatives:

Reporting Requirement	Reporting Period	Who must report?
Complaints	As received Complaints related to OTC Derivatives are to be reported by distributors to Cmglobals within 5 days of receiving the complaint	All distributors
Investor feedback	As received Any feedback that suggests that the product may no longer consistent with an Investor’s likely objectives	All distributors
Significant dealing/s outside the target market	As soon as practicable, and in any case within 10 business days after becoming aware Distributors are to report date or date range of the significant dealing/s and description of the significant dealing to Cmglobals	All distributors

CM Globals

Suite 118, 252 Russell Street, MELBOURNE VIC 3000 AUSTRALIA

Phone +61 3 6153 0261

info@cmglobals.com

Target Market Determination