THIS SOFTS PARTICIPATION UNIT AGREEMENT (the Agreement) is entered into on _____
20
(the Effective Date).
BETWEEN
(1)
CME EUROPE LIMITED (company number 8189042), incorporated under the laws of
England and Wales, whose registered office is at One New Change, London EC4M 9AF,
England (the Exchange); and
(2)
[NAME OF PARTICIPANT] (company number []), organised and existing under the laws of
[], whose registered office is at [] (the Participant),
each a Party and together the Parties.
WHEREAS
(A)
The Exchange is a recognised investment exchange under section 290 of the Financial
Services and Markets Act 2000 and acts in relation to certain transactions under the terms of
the Exchange Rules as amended from time to time.
(B)
The Exchange lists certain products (as specified in the Schedule and hereinafter referred to
as the Eligible Product(s)) and makes them available under the terms of the Softs
Participation Unit Programme (SPU Programme).
(C)
The Participant wishes to participate in the SPU Programme and agrees to be subject to the
terms and conditions of this Agreement in that respect.
IT IS AGREED as follows:
1
Definitions and interpretation
1.1
In this Agreement, the following words shall have the following meaning:
“Cocoa Trading Revenue” means the Exchange’s trading fees revenue in respect of the
Eligible Product(s) less the Incentives in a given month during the Term of this Agreement.
“Incentive” means fee holidays and other expenses in respect of research on the Eligible
Product(s) incurred by the Exchange.
“Market Wide Fee Holiday” shall mean the period from the Commencement Date until 30
June 2015.
“Rebates on Trading Fees” means rebates payable by the Exchange to an SPU Holder in
respect of an SPU Holder’s house accounts only and regarding:
(a)
cocoa trading fees;
(b)
any charges applicable Exchange for Related Positions (EFRPs); and
(c)
block trade surcharges,
for Eligible Products.
1.2
In this Agreement, unless defined herein or the context requires otherwise, capitalised words
and phrases shall have the same meaning as set out in the Exchange Rules.
1
CMEEL SPU Programme Agreement
1.3
In this Agreement, unless otherwise specified:
1.3.1
the provisions of Exchange Rules 1.2.4, 1.2.5, 1.2.6, 1.2.7, 1.2.8, 1.2.9 and 1.2.10 (regarding
interpretation) shall apply;
1.3.2
the recitals and the headings are inserted for convenience only and do not affect the
interpretation of this Agreement;
1.3.3
references to clauses and schedules are to clauses of, and schedules to, this Agreement
and references in a schedule to a paragraph are to a paragraph of that schedule;
1.3.4
the Agreement includes all schedules but, in the event of any conflict between the terms of a
schedule and the main clauses of this Agreement, the main clauses of this Agreement shall
take precedence; and
1.3.5
references to this Agreement or any other document are to that document as from time to
time amended, restated, novated or replaced, however fundamentally.
2
Rights and Obligations of the Participant
2.1
With effect from the Effective Date, the Participant agrees to comply with and be bound by
the terms of the Exchange Rules and the terms of this Agreement.
2.2
In order to be eligible for the SPU Programme, the Participant must be either:
(a)
a commercial market participant; or
(b)
a specialist hedge fund involved in the business of the Eligible Products; or
(c)
a futures market maker; or
(d)
a broker; or
(e)
a Clearing Member.
2.3
Only a Participant meeting the Eligibility Criteria shall be deemed a Qualifying Participant
(Qualifying Participant).
2.4
A Qualifying Participant shall be deemed an SPU Holder (SPU Holder) from the Effective
Date until termination of this Agreement.
2.5
The SPU Holder shall at all times for the duration of this Agreement contribute liquidity and
volume on a reasonable effort basis in order to support trading in the Eligible Product(s)
listed on the Exchange (the Commitment).
2.6
Each SPU Holder will be entitled to designate one (1) primary representative to the PAC.
Each SPU Holder will be entitled to designate one (1) secondary representative to the PAC,
at their discretion.
2.7
SPU Holders may transfer their rights in the SPU Programme at any time following the
Commencement Date in the event they wish to exit from the SPU Programme, provided that
such transfer shall only be deemed acceptable if made to another Qualifying Participant with
the Exchange’s written consent, such consent not to be unreasonably withheld.
3
Rights and Obligations of the Exchange
3.1
The Exchange may enter into agreements with no more than fifteen (15) Qualifying
Participants prior to the Commencement Date, being the date of launch of the Eligible
Products as set out in Schedule 1.
3.2
In consideration of the Commitment, the Exchange will offer the Rebates on Trading Fees
and share the Exchange’s Cocoa Trading Revenue as specified in Schedule 2.
3.3
The Exchange will establish and facilitate a Product Advisory Committee (PAC) which will
advise the Exchange on matters relating to the physical delivery mechanism in respect of the
2
CMEEL SPU Programme Agreement
Eligible Product(s). These matters may include discussions in relation to issues such as
quality parameters, storage and grading practices in the Eligible Product(s). The Exchange
may in its discretion include Qualifying Participants in the PAC who are not SPU Holders.
3.4
The Exchange will issue a statement at the end of each quarter specifying the amount of
Rebates on Trading Fees and share of Exchange’s Cocoa Trading Revenue payable to the
SPU Holder in respect of that quarter.
3.5
The Exchange will issue a monthly statement specifying the trading volumes in Eligible
Product(s).
3.6
The Exchange will review transactions related to the SPU Programme in order to check that
trades have a genuine economic rationale and are exposed to market risk. Trades may be
discounted from the calculation of total volume for an individual firm where trading is
believed to have been initiated for the primary purpose of satisfying the requirements of the
incentive scheme.
Terms and Conditions of the SPU Programme
3.7
This section sets out the terms and conditions of this SPU Programme.
Initial Term
3.8
The first Term shall commence on the Commencement Date (the Initial Term) and shall
continue until 31 March 2017.
3.9
The SPU Holder shall pay an SPU fee of €50,000.00 (Membership Fee) within thirty (30)
days following the date of invoice from the Exchange. The Membership Fee shall be nonrefundable except in the event the Exchange is unable to launch the Eligible Product(s).
Rebates on Trading Fees
3.10
The Exchange shall pay the SPU Holders in each Term the Rebates on Trading Fees as set
out in Schedule 2. For the avoidance of doubt, no rebates are applicable during the Market
Wide Fee Holiday.
Share of Exchange’s Cocoa Trading Revenue
3.11
The Exchange will share a percentage level of the Exchange’s Cocoa Trading Revenue with
the SPU Holders as set out in Schedule 2. The Exchange’s Cocoa Trading Revenue will be
shared equally amongst all SPU Holders.
3.12
The Exchange will make the revenue share payments described in clause 3.11 within forty
five (45) days following the end of a given quarter.
Term Review
3.13
Following the Initial Term, the Exchange may review the SPU Programme and may renew
the Term of this Agreement in additional renewable terms of two (2) year periods (each a
Term and respectively the Second, Third, Fourth and Fifth Terms).
3.14
The Exchange will conduct a review on market-wide volume targets on an annual basis, the
first review to be carried in the fourth quarter of 2015.
3.15
The Exchange shall have the right to unilaterally modify the market-wide volume targets
following each annual review.
3.16
Following the Third Term, the Exchange shall have the right to modify or, at the Exchange’s
sole discretion, terminate the SPU Programme during each Term Review period in
accordance with clause 5 (Termination).
Commitment under the SPU Programme
3.17
The Exchange reserves the right to, and may, in its absolute discretion, at any time during
any of the Terms make a Cocoa Trading Revenue share payment to any SPU Holder in a
3
CMEEL SPU Programme Agreement
given quarter where the SPU Holder has not complied with the Commitment or remove an
SPU Holder by serving a notice of termination in accordance with clause 5 (Termination) for
failure to comply with the Commitment following a thirty (30) day warning period (or prenotice) in writing by the Exchange to the SPU Holder.
3.18
In the event the Exchange decides to remove a non-compliant SPU Holder as described in
section 3.17 above, the SPU Holder will have the right to transfer their rights in the SPU
Programme to another Qualifying Participant within thirty (30) days from receipt of the
Exchange’s notice of removal. In the event the SPU Holder to whom notice of removal has
been served does not exercise this right to transfer its rights in the SPU Programme to
another Qualifying Participant within the 30-day notice period, the SPU rights shall revert
back to the Exchange following the expiry of such 30-day notice period and the Exchange
shall be allowed, at its discretion, to offer the SPU to another Qualifying Participant.
4
Confidentiality
4.1
Each Party will treat as confidential all information obtained from the other Party under or in
connection with this Agreement which is designated as confidential (Confidential
Information). The recipient Party will not (1) disclose Confidential Information to any person
(except only to those employees, agents, sub-contractors, suppliers and other
representatives who need to know it); or (2) use Confidential Information for purposes other
than performing under this Agreement, without the other Party’s prior written consent (not to
be unreasonably withheld or delayed).
4.2
Clause 4.1 will not extend to information which:
4.2.1
was in the possession of the recipient Party (with full right to disclose) before receiving it;
4.2.2
is already or becomes public knowledge (otherwise than as a result of a breach of clause
4.1);
4.2.3
is independently developed by the recipient Party without access to or use of such
information; or
4.2.4
is required to be disclosed under any Applicable Law or by any Regulatory Authority.
4.3
Each Party will ensure that all persons to whom it discloses any Confidential Information are
aware, prior to disclosure, of the confidential nature of the information and that they owe a
duty of confidence to the other Party.
4.4
Each Party will establish and maintain security measures to safeguard information and data
of the other Party in its possession from unauthorised access use or copying.
4.5
Upon termination of this Agreement any Confidential Information received by a Party will be
destroyed or returned to the disclosing Party (on the disclosing Party’s written request) and
shall not thereafter be retained in any form by the receiving Party. Notwithstanding the
foregoing, copies of Confidential Information that are required to be retained under any
Applicable Law or pursuant to monitoring, compliance or audit requirements or that are
created pursuant to any automated archiving or back-up procedures which cannot
reasonably be deleted may be retained, however, such Confidential Information shall
continue to be subject to the terms of this Agreement.
5
Termination
5.1
This Agreement shall terminate:
5.1.1
upon thirty (30) days written notice given by either Party to the other Party;
5.1.2
immediately, upon written notice being given by the Exchange to the Participant, if the
Exchange is required (by any Regulatory Authority or under any Applicable Law) to terminate
the SPU Programme; or
4
CMEEL SPU Programme Agreement
5.1.3
for non-compliance as described in sections 3.17 and 3.18.
5.2
On termination under clause 5.1 above, this Agreement shall cease to have effect except for
clauses 1, 4, 7 (except clauses 7.2 and 7.3) and 8.
6
Representations and warranties
6.1
The Participant represents and warrants that it:
6.1.1
is duly incorporated and validly existing under the laws of its country of incorporation and has
all the necessary or relevant licences to participate in this SPU Programme;
6.1.2
has the capacity, and has taken all necessary corporate action to authorise it, to execute this
Agreement and to perform the obligations it is expressed to assume under it;
6.1.3
has duly executed the Agreement and its execution does not, and its performance of its
obligations under this Agreement will not, contravene or violate its constitutional documents,
any Applicable Law, rights of any third parties or agreements to which it is party; and
6.1.4
the obligations assumed by it under this Agreement are legal, valid, binding and enforceable
obligations.
6.2
The Participant undertakes to notify the Exchange immediately in the event of its ceasing to
be able to make any of the representations, warranties and undertakings set out in clause
6.1.
6.3
Each representation and warranty set out in clause 6.1 shall be deemed to be repeated on
each Business Day during the term of the Agreement.
7
Miscellaneous
7.1
Notices
7.1.1
A notice or other communication given to the Exchange under or in connection with this
Agreement shall be given in accordance with the Exchange Membership Procedure as if the
Participant were a “Member” thereunder.
7.1.2
A notice or other communication given to the Participant under or in connection with this
Agreement shall be given in accordance with the Exchange Membership Procedure as if the
Participant were a “Member” thereunder, save that it will be sent to the address set out
below or such other address as the Participant may notify the Exchange where permitted in
the Exchange Rules, a notice or other communication given to the Participant may be given
via email or fax to the email address and fax number set out below (as updated pursuant to
clause 7.1.3 from time to time).
[Participant]
[Participant’s address]
[Name of Participant’s
Nominee]
[E-mail Address]
[Fax number and person
to be marked
FAO]
7.1.3
The Participant must notify the Exchange in writing of any changes to the details provided to
the Exchange from time to time under clause 7.1.2.
7.2
Amendments
7.2.1
Subject to clause 7.2.2, no purported variation of this Agreement shall be effective unless it
is in writing, refers specifically to this Agreement and is executed by each Party.
7.2.2
The Exchange shall be entitled to make such amendments to the Agreement as it
reasonably considers necessary or desirable to reflect amendments made to the SPU
5
CMEEL SPU Programme Agreement
Programme by providing prior written notice of any such amendments of not less than thirty
(30) days to the Participant.
7.3
Assignment
7.3.1
Subject to clause 7.3.2, neither Party may assign, delegate, sub-contract, transfer or create
an encumbrance over any or all of its rights and obligations under this Agreement without the
prior written agreement of the other Party. Such agreement is not to be unreasonably
withheld.
7.3.2
The Exchange shall be entitled to assign any or all of its rights or benefits under this
Agreement to any Affiliate of the Exchange on terms that if any such assignee shall cease to
be an Affiliate of the Exchange then (unless such rights shall previously have been assigned
to a continuing Affiliate of the Exchange or the parties have agreed otherwise) such rights
shall terminate.
7.4
Waiver
7.4.1
Exchange Rules 2.7.1 and 2.7.2 (regarding waiver) shall apply to this Agreement, save that
all references to the Exchange Rules shall be interpreted as references to this Agreement.
7.5
Severability
7.5.1
Exchange Rule 2.6 (regarding severability) shall apply to this Agreement, save that all
references to the Exchange Rules shall be interpreted as references to this Agreement, or
each part of it as the case may be.
7.6
Entire Agreement
7.6.1
This Agreement, the Exchange Rules and the Related Agreements where applicable,
constitute the entire agreement between the Parties and supersede any prior agreement,
understanding, undertaking or arrangement between the Parties relating to the subject
matter of the Agreement.
7.6.2
The Participant acknowledges and agrees that by entering into this Agreement, it does not
rely on any statement, representation, assurance or warranty of any person (whether a Party
to the Agreement or not and whether made in writing or not) other than as expressly set out
in the Agreement, the Rules or the Related Agreement where applicable.
7.6.3
The Participant agrees that it shall have no right or remedy (other than for breach of
contract) in respect of any statement, representation, assurance or warranty (whether made
negligently or innocently) other than as expressly set out in this Agreement, the Exchange
Rules or the Related Agreements where applicable.
7.6.4
Nothing in this Agreement shall exclude or limit the liability of either Party which cannot by
law be excluded.
7.7
Relationship of Parties
7.7.1
Nothing in this Agreement is intended to create a partnership or legal relationship of any kind
that would impose liability on one Party for the act or failure to act of the other Party, or to
authorise either Party to act as agent for, make representations, act in the name of, on
behalf of or otherwise bind the other Party.
7.8
Counterparts
7.8.1
This Agreement may be entered into in any number of counterparts and by the Parties to it
on separate counterparts, and each of the executed counterparts, when duly exchanged or
delivered, shall be deemed to be an original, but taken together, they shall constitute one
and the same instrument.
6
CMEEL SPU Programme Agreement
7.8.2
Any counterpart may take the form of a faxed copy of this Agreement and the Party
delivering the faxed counterpart shall within seven (7) days of exchange by fax, deliver the
original of that counterpart to the other Party by express courier.
7.9
Service of process
7.9.1
If the Participant does not have an office or place of business in England or Wales, it hereby
irrevocably authorises and appoints [Participant to insert name and address of process
agent] (or such other person having an office or place of business in England or Wales as
the Participant may at any time in the future substitute by giving prior notice in writing to the
Exchange (the Process Agent)) to accept on its behalf service of all legal process arising
out of or in connection with any arbitration proceedings or other related proceedings before
the English courts commenced in connection with this Agreement. Further, the Participant
agrees that failure by the Process Agent to notify the Participant of the process will not
invalidate the proceedings concerned.
7.10
Contracting out of third party rights
7.10.1
Except as identified expressly herein, no term of this Agreement is enforceable under the
Contracts (Rights of Third Parties) Act 1999 by a person who is not a party to this
Agreement.
8
Governing law and arbitration
8.1
This Agreement and any non-contractual obligations connected with it, the Exchange Rules
and Related Agreements where applicable, shall be governed by and construed in
accordance with the laws of England and Wales.
8.2
The provisions of Exchange Rules 2.8.2, 2.8.3, 2.8.4 and 2.8.5 (regarding disputes and
arbitration) shall apply to this Agreement save that any reference to the Exchange Rules
shall be interpreted as a reference to this Agreement.
THIS AGREEMENT has been entered into on the Effective Date.
Signed on behalf of
CME EUROPE LIMITED
acting by [NAME OF DIRECTOR], director
……………………………..
Director
…………………………..…
and [NAME OF DIRECTOR], director
Director
Signed on behalf of
[NAME OF PARTICIPANT]
acting by [NAME OF DIRECTOR], a director
Director
7
CMEEL SPU Programme Agreement
……………………………..
SCHEDULE 1
Eligible Products and Launch Date
1.
Cocoa Futures (Physically Deliverable) (Exchange Product code: CCP) to be launched on a date which will be notified on the Exchange website.
1
CMEEL SPU Programme Agreement Schedules
SCHEDULE 2
Exchange Rebates on Trading Fees and applicable share of Exchange’s Cocoa Trading Revenue in each Term
Term/Period
Time period
Market Wide Fee Holiday
Initial Term
(period from Commencement Date until 30 June 2015)
(period from Commencement Date
Period from 1 July 2015 until 30 June 2016
until 31 March 2017)
Remainder of Initial Term
(period from 1 July 2016 until 31 March 2017)
Rebate on Cocoa
Share of Exchange’s Cocoa
Trading Fees
Trading Revenue
Fee holiday
n/a
100%
30%*
25%
30%*
Second Term
Two (2) year period
25%
15%*
Third, Fourth and Fifth Terms
Two (2) year periods each
25%
10%*
*The Exchange may, in its sole discretion, increase the revenue share percentage in return for additional goals being achieved by the SPU Holders (for
example, achieving target levels of open interest, provided that the SPU Holders meet the designated quarterly market-wide volume targets). The Exchange
will make such revenue share payments quarterly to the SPU Holder within forty five (45) days following the closing of a given year quarter.
2
CMEEL SPU Programme Agreement Schedules