Risk Disclosure Statement
A person who agrees to be bound by the Rules of the Australian CLimate Exchange
(ACX) Rules (�Rules�) and who wishes to use the market operated under those Rules
(�Market�) will be exposed to the risks set out below.
New Market
The market was established in 2005. The fact that the Market has only recently developed
means that there is no long term historical data on Market activity and performance.
Similarly the Market structure and its participants do not have a �track record�
as such. These factors mean that the risks associated with the Market may be greater
than those associated with traditional financial markets.
However, ACX has staff who are experienced in operating markets. ACX will apply
that experience to the operation of the Market.
Liquidity
For various reasons, it is expected that not all investors in traditional financial
markets will invest in the Market. A reduced number of potential investors may reduce
liquidity in the Market.
Settlement Risk
In markets where settlement occurs some time after the contract of sale is executed,
there is a risk that one of the parties will default in its settlement obligations.
For example, a seller of shares may be unable to deliver the proper documentation
transferring title to the shares, or a buyer may be unable to deliver the cash to
purchase the shares. This is known as settlement risk.
The Rules provide that settlement must occur on the fifth business day after a transaction
is executed. The Rules provide (in effect) that the ACX broker guarantees to a seller
the performance of the payment obligations of the buyer and the ACX broker guarantees
to a buyer the delivery of the quantity of Emissions commodities purchased. Each
ACX broker must have appropriate financial resources and insurance in place to cover
its liabilities in this regard
Voluntary Market
ACX advises that the market in Australia for Emission Commodities is a voluntary
one and is not regulated by any government agency or body and is not covered by
any State of Federal statute. Participants must form their own view as to the risk
of future regulations and mandatory trading regimes that may come into force in
Australia or internationally which may affect the value or use of emissions commodities
traded on the exchange.
No Fidelity Fund
ACX advises that they are not required to and do not have a Fidelity Fund.
Fees
ACX will not charge any fees to users of the Market other than listees and ACX brokers.