CFDs

Product Disclosure Statement

Index and Commodity CFDs23 May 2011

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IMPORTANT NOTICES / DISCLAIMERS

This is a Product Disclosure Statement (PDS) prepared by

MF Global Australia Limited (MFGA). The date of this PDS

is 23 May 2011. This PDS relates to contracts for difference

in respect of underlying instruments which are futures

contracts over market indices and commodities, where

those futures contracts are quoted on a futures exchange in

Australia, the United States and other jurisdictions specified

by MFGA (Index and Commodity CFDs). MFGA offers two

types of Index and Commodity CFDs: Expiring CFDs and

Rolling CFDs. Throughout this document the general term

“Index and Commodity CFD” is used to refer to both Expiring

CFDs and Rolling CFDs.

with key centres in London, Chicago, Hong Kong, New York,

Singapore, Sydney, Taiwan and Mumbai. The MF Global

group operates on more than 50 exchanges and holds

memberships on most of the major futures and securities

exchanges worldwide. MFGA is a trading participant of

both the ASX and ASX24 and a clearing participant of their

respective clearing facilities ASX Clear Pty Limited and ASX

Clear (Futures) Pty Limited.

WARNING

Index and Commodity CFDs are speculative products that are highly leveraged and carry significantly greater risk than non-geared investments such as share trading. You should not invest in Index and Commodity CFDs unless you are experienced in derivatives and understand and are comfortable with the risks of investing in Index and Commodity CFDs.

You should obtain your own financial, legal, taxation and other professional advice as to whether Index and Commodity CFDs are an appropriate investment for you.

This PDS is important and should be read in its entirety.

Investors should ensure they read and understand this PDS,

in particular section 4 “Significant Risks” and determine

whether Index and Commodity CFDs are suitable for them,

before deciding whether to open a CFD Account with MFGA

and invest in Index and Commodity CFDs.

This PDS also contains other important information about

the costs of Index and Commodity CFDs and the significant

characteristics, features and benefits of Index and

Commodity CFDs.

About MFGA

MF Global Australia Limited ABN 50 001 662 077 (MFGA)

is the holder of an Australian Financial Services Licence

number 230563.

MFGA is a subsidiary of the broker, MF Global Holdings Ltd,

which can trace its origins back 200 years and is today one

of the world’s largest futures broking organisations. The

MF Global group of companies employs over 2,000 people,

Counterparty risk

MFGA is the counterparty to any CFDs that you may

enter into under this PDS. MFGA’s obligations

in respect of those CFDs are not guaranteed

by MF Global Holdings Ltd or any other entity.

Accordingly, you take the risk that MFGA may not

be able to meet its obligations in respect of any

CFD that it enters into with you. It is important

that you understand the risks of this counterparty

relationship. To assist you to assess counterparty

risk, a copy of MFGA’s most recent financial

statements lodged with ASIC is available from MFGA

on request, free of charge.

MFGA’s registered office in Australia is located at: Level 21,

Grosvenor Place 225 George Street, Sydney NSW 2000

Telephone: (02) 8273 8933

Facsimile: (02) 9247 3765

Mail: PO Box N699 Grosvenor Place NSW 1220

Internet: www.mfglobal.com.au

Email: cfds@mfglobal.com.au

Representations

MFGA does not guarantee the performance, return of

capital from, or any particular rate of return of, an Index and

Commodity CFD. Investment products are always subject to

investment risk. Customers may lose more than the amount of funds in their CFD Account.

Investments in Index and Commodity CFDs involve

significant investment risk, including possible delays in

payment and loss of income or capital invested. Customers

should note that historical financial performance of any

Index and Commodity CFD or any underlying Futures Contract

is no assurance of future financial performance.

The information contained in this PDS is general advice

only. In preparing this PDS MFGA has not taken into account

your objectives, financial situation or needs. You should

consider the appropriateness of opening a CFD Account

and entering into Index and Commodity CFDs having regard

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to your objectives, financial situation and needs and

should obtain your own financial, legal, taxation or other

professional advice.

This PDS has been prepared to comply with applicable

Australian law requirements in respect of financial products.

This PDS does not contain, and MFGA provides no advice

in respect of, the laws of any jurisdiction to which any

underlying instrument or security relates. No aspect of

this product has been endorsed or approved by any stock

exchange, futures exchange or regulatory agency or any party

or market referred to in this PDS.

Examples in this PDS are provided for illustrative purposes

only and do not necessarily reflect MFGA’s actions or

determinations or your personal circumstances.

Update of information

Information in this PDS may be updated from time to time

where that information is not materially adverse to customers.

MFGA may provide updated information on the MFGA website:

www.mfglobal.com.au. A copy of the updated information

is also available upon request free of charge by contacting

MFGA. MFGA may be required to issue a supplementary PDS

as a result of certain changes, in particular where the changes

are materially adverse from the point of view of a reasonable

person deciding as a retail client whether to open a CFD

Account or invest in Index and Commodity CFDs. This PDS

and any supplementary PDS is available in paper form and in

electronic form from our website at www.mfglobal.com.au or

you can call (02) 8273 8933.

Consents

Blake Dawson has given and has not withdrawn its consent

to be named in this PDS in the form and context in which

it is named and to the inclusion of the general summary of

the tax issues relevant to the Index and Commodity CFDs

provided in section 6.

Client Money

MFGA will handle all client funds it receives in

accordance with, and subject to, the requirements

of Part 7.8 Division 2 the Corporations Act. Where

required by the Corporations Act, client funds will

be paid into a segregated account maintained by

MFGA with an Australian bank.

MFGA is entitled to withdraw client funds from the

segregated account in the circumstances and for

the purposes set out in the Corporations Act. For

example, if you incur a Margin obligation to MFGA,

you will be required to pay those Margin amounts

to MFGA and your client funds will be used to make

that payment. Also, MFGA is entitled to use

client funds it receives in connection with Index

and Commodity CFDs (which are derivatives) for

the purpose of meeting obligations MFGA incurs

in connection with margining, guaranteeing,

securing, transferring, adjusting or settling dealings

in derivatives by MFGA, including dealings on

behalf of other clients and, for example, to meet

obligations MFGA incurs in respect of its derivatives

hedging activities it undertakes to hedge its

exposure to you and other clients in relation to

Index and Commodity CFDs.

Also, under the CFD Client Agreement you

authorise MFGA to deduct from the segregated

account money to which you are entitled, for the

purposes of discharging obligations which MFGA

incurs to MFGA’s Hedge Counterparty to hedge its

exposure to the Client in connection with Index and

Commodity CFDs or to hedge its exposure to other

clients who have entered into Index and Commodity

CFDs with MFGA under agreements similar to the

CFD Client Agreement.

For example, even though you may deposit $10,000

with MFGA and incur Margin obligations to MFGA

of $4,000, some or all of the remaining $6,000

may be used by MFGA to meet obligations it incurs

in respect of its derivatives hedging activity. For a

further discussion in relation to MFGA’s hedging

activities and the use of client funds see sections

7.3 and 7.4.

It is therefore important for you to note that even

though your money may be paid into one or more

segregated accounts, this may not afford you

absolute protection. First, within the segregated

account, all client funds are pooled together and so

an individual client balance may not be protected if

there is a default in the overall segregated account

balance. Secondly, if you have incurred Margin

obligations to MFGA, your client funds will be paid

to MFGA to meet those obligations. Thirdly, to the

extent that MFGA has used client funds to meet

obligations incurred by MFGA in respect of

its hedging activities referred to above, there is an

exposure to counterparty risk in relation to both

MFGA and, indirectly, to its Hedge Counterparty, in

relation to those funds. For these reasons you

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Your personal information may be disclosed to other

entities in the MF Global group for these purposes. It may

also be disclosed to any financial institution nominated by

you and may be disclosed to your financial adviser. You

can, by contacting us, instruct us not to disclose personal

information to companies related to us.

While the information we ask you to supply is not required

by law, we may not be able to assess your application if the

information is not supplied.

Our full privacy policy is available from our website:

www.mfglobal.com.au.

Dispute Resolution

MFGA has a formalised client complaint resolution

procedure. All complaints are reviewed and investigated

by the Compliance Manager based in Sydney. If you make

a complaint, our first response will be to contact you to

discuss the complaint and to register a formal record of such

complaint. We will try to resolve your complaint quickly and

fairly. If, despite our best efforts, you believe your complaint

has not been satisfactorily dealt with, we offer clients the

use of an independent industry arbiter, namely, the Financial

Ombudsman Service (FOS). MF Global is a member of FOS

and has agreed not to contest a final resolution from FOS.

You can contact FOS by writing to:

Financial Ombudsman Service GPO Box 3, Melbourne

Victoria 3001

Toll Free: 1300 780 808

Facsimile: (03) 9613 6399

Website: www.fos.org.au

Email: info@fos.org.au

Ethical Considerations

We do not take labour standards, or environmental, social or

ethical considerations into account when offering Index and

Commodity CFDs.

Cooling off

There is no cooling off period in respect of Index and

Commodity CFDs.

Defined Terms

Capitalised terms used in this PDS are defined in the

Glossary in section 9 or elsewhere in this PDS, unless the

context otherwise requires.

are exposed to the risk that you may not receive all

money to which you are entitled if there is a deficit

in the client money account and MFGA becomes

insolvent or is otherwise unable to pay any amount

owing to you.

You will receive account statements (see section

7.2). The statement will include information such

as cash balances and Free Equity. You should

note that a reference to a positive cash balance or

positive Free Equity does not mean that MFGA holds

all or any of that amount in a segregated account.

Foreign Jurisdictions

The distribution of this PDS in jurisdictions outside Australia

may be restricted by law and therefore persons into whose

possession this document comes should seek advice on

and observe any such restrictions. Failure to comply with

relevant legislation may violate those laws. This PDS does

not constitute an offer or invitation in relation to an Index

and Commodity CFD in any place in which, or to any person

to whom, it would not be lawful to make such an offer or

invitation. The financial products offered under this PDS

have not been and will not be lodged or registered under the

United States Securities Act of 1933, as amended and may

not be offered or sold directly in the United States.

Privacy

If you enter into the CFD Client Agreement and complete

the information required by the CFD Client Agreement, you

will be supplying us with personal information in relation

to which we will be bound by the Privacy Act 1988 (Cth).

You can contact us by phone, fax or email or in any other

manner acceptable to MFGA, including to request access

to your information. In normal circumstances, we will give

you full access to your information subject to any legal

or administrative restrictions. There may be a charge to

provide you with full access where your request requires the

compilation of archived or voluminous information.

We may collect and use your information for the following

purposes:

• assessingyourapplication;

• assessingthecreditandotherexposuresthattheMF

Globalgrouphastoyou;

• marketingofproductsandservicesofasimilartype;

• determiningfutureproductandbusinessstrategiesand

todevelopMFGAservices;

• communicatingwithyouinrelationtoyourholdingand

all transactions relating to the holding.

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Key Features

1. Introduction

2. Description Of Index and Commodity CFDs

3. Significant Benefits

4. Significant Risks

5. Amounts Payable And Interest Payments

6. Taxation

7. Other Important Information

8. Examples

9. Glossary

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Key Features

This investment

Feature Description Cross-reference

Issuer of this PDS and Index and Commodity CFDs

MF Global Australia Limited (AFSL 230563) (MFGA) Section 2.1

Investment

Index and Commodity CFDs, which are CFDs in respect of futures contracts over market indices and commodities.

MFGA offers two types of Index and Commodity CFDs: Expiring CFDs and Rolling CFDs. The main differences between Expiring CFDs and Rolling CFDs are:

• ExpiringCFDshaveafixedexpirydateknownastheMFGAExpiry Date, whereas Rolling CFDs do not have a fixed expiry date and will remain open until closed out by you or MFGA asdescribedinthisPDS;

• AnExpiringCFDwillonlyrelatetoasingleunderlyingFutures Contract. A Rolling CFD will “roll” from the current underlying Futures Contract to the next Futures Contract in the relevant series shortly before expiry of the current Futures Contract. This process of rolling into new Futures Contracts will continue until the CFD is closed out by you or MFGAasdescribedinthisPDS;

• PricesquotedforExpiringCFDsarebasedonthepriceofthe underlying Futures Contract, subject to an additional spread, known as the MFGA Spread. Prices quoted for Rolling CFDs reflect the price of the underlying Futures Contract and the MFGA Spread, but also reflect an additional component,knownasFairValue;

• ExpiringCFDsarenotsubjecttoaDividendAdjustment.RollingCFDsaresubjecttoaDividendAdjustment;

• ExpiringCFDsarenotsubjecttodailyfundingrates.RollingCFDs are subject to daily funding rates.

Section 2.2, 2.6, 5.1, 5.3, 5.4 and 5.6.3

Reference AssetA range of index and commodity futures contracts (Futures Contracts)

Section 2.2

Contract Specifications

The contract specifications for each Index and Commodity CFD will vary depending on a number of factors, including the features of the underlying Futures Contract.

In some cases minimum and maximum trade and Lot Sizes will apply.

Please refer to the MFGA website for information regarding the contract specifications for each Index and Commodity CFD.

Section 2.2 and Section 2.4

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Relevant CurrencyEach Index and Commodity CFD is denominated in the Relevant Currency which will be the same currency as the currency in which the underlying Futures Contract is denominated.

Section 2.4

Long and short positions

You can open long or short positions depending on your view of the market.

Section 2.4

Contract Expiry

The Contract Expiry differs depending on the type of Index and Commodity CFD.

Expiring CFDs have a fixed expiry date, known as the MFGA Expiry Date. The MFGA Expiry Date will not necessarily exactly correspond with the expiry date of the underlying Futures Contract. A Last Dealing Time will also apply to each Expiring CFD.

Rolling CFDs do not have a fixed expiry date and will remain open until closed out by you or MFGA as described in this PDS.

Section 2.6.3

Opening an account

CFD Client AgreementComplete and sign the CFD Client Agreement and return it to MFGA or your adviser.

Section 2.3

Minimum CFD Account opening balance

Deposit the Minimum Deposit Amount as notified to you by MFGA.

Section 2.8

Trading

Opening an Index and Commodity CFD

Orders can be placed through our electronic trading platform, by phone, fax or by email or in any other manner acceptable to MFGA.

Section 2.4

Closing an Index and Commodity CFD

The circumstances in which an Index and Commodity CFD can be closed differ depending on the type of Index and Commodity CFD.

You can place an order to close out an Expiring CFD at any time before the Last Dealing Time of the Expiring CFD during the relevant trading hours. If you elect not to do so the Expiring CFD will be closed out by MFGA on the relevant MFGA Expiry Date.

A Rolling CFD can be closed out at any time during market hours of the Rolling CFD by instructing MFGA to close your open CFD position.

Section 2.6

Initial MarginInitial Margin rates are generally set at between 2% and 15% of the Contract Value of an Index and Commodity CFD but may vary (up to 100% of the Contract Value) depending on volatility.

Section 2.5.1

Variation MarginAll Index and Commodity CFDs are marked to market daily, with profits or losses credited or debited to your CFD Account.

Section 2.5.2

Additional Margin

MFGA may require payment of Additional Margin if the Gross Liquidation Value of your account falls below AUD1,000 or if the amount in your account is not sufficient to meet all payments when due.

Section 2.5.3

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Method of paymentAny amounts payable by MFGA to you will be credited to your CFD Account and any amounts payable by you to MFGA will be debited from your CFD Account.

Section 2.5.4

Fees and charges

MFGA Spread

MFGA will apply a spread, known as the MFGA Spread, when it quotes prices to you to buy or sell an Index and Commodity CFD position. The MFGA Spread is in addition to any buy/sell spread or similar spread which may apply to the underlying Futures Contract on the Relevant Exchange (and, in the case of a Rolling CFD, is separate from the Fair Value component).

The MFGA Spread will vary in respect of each Index and Commodity CFD. For information on the MFGA Spread applicable to a particular Index and Commodity CFD, please refer to the contract specifications on the the MFGA website.

Section 5.1

Commission

Commission may also be charged on CFD transactions when you enter into a CFD and when you close out a CFD. Minimum transaction commissions (also referred to as minimum tickets) may also apply.

Section 5.2

Fair Value

The price MFGA quotes to you to buy or sell a Rolling CFD will also be affected by a Fair Value component, to reflect announced and anticipated dividends, distributions and corporate actions, and the implicit funding cost that is included in the price of the underlying Futures Contract.

Dividend Adjustment

A Dividend Adjustment will be applied to your CFD account in respect of dividends, distributions and corporate actions announced by a constituent of the index covered by the relevant Futures Contract, taking into account that constituent’s weighting in the relevant index. You will generally receive a Dividend Adjustment if you hold a long Rolling CFD and you will generally be required to pay a Dividend Adjustment if you hold a short Rolling CFD.

Electronic trading platform

If you use MFGA’s CFD electronic trading platform, you may be charged a monthly fee of up to AUD100.

Section 5.5

Interest rates

Credit interest

MFGA will pay interest to you on your CFD Account credit balances at the MFGA Base Rate minus a maximum of 3.5% per annum. This will be determined separately for AUD and each currency in a Foreign Currency Ledger in your CFD Account.

Section 5.6.1

Debit interest

You will be required to pay interest to MFGA on CFD Account debit balances at the MFGA Base Rate plus a maximum of 4% per annum. This will be determined separately for AUD and each currency in a Foreign Currency Ledger in your CFD Account.

Section 5.6.1

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Short and Long Funding Rates

Daily funding rates may apply depending on the type of Index and Commodity CFD.

There is no daily funding rate applicable to Expiring CFD positions.

Daily funding rates are applicable to Rolling CFD positions.

If you hold a short Rolling CFD position past Business Close, you will generally receive a daily funding rate equal to the MFGA Base Rate less a maximum of 3% per annum.

If you hold a long Rolling CFD position past Business Close, you will generally be required to pay a daily funding rate equal to the MFGA Base Rate plus a maximum of 3% per annum.

Section 5.6.3

Default interestYou will be required to pay interest to MFGA on any overdue unpaid amounts at the applicable MFGA Base Rate plus a maximum of 8% per annum.

Section 5.6.2

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1. Introduction 1.1 What is a contract for difference?

A contract for difference (CFD) is an agreement which allows

you to make a profit or loss from fluctuations in the price of

an underlying instrument or security without actually owning

that instrument or security. Under the CFD, one party is

entitled to be paid an amount of money, or is required to

pay an amount of money, depending on movements in the

price or value of the underlying instrument or security . This

transaction concludes with the parties settling the difference

between the value of the CFD at the time it was entered into

and the value of the CFD at the time it was closed. Any profit

or loss will also be affected by other payments applying to

CFDs such as fees and interest and may also be affected

by spreads, commissions or foreign exchange rates. During

the term of the CFD transaction, the price of the CFD will be

marked-to-market daily so that at the end of each day during

the term of the CFD transaction, a payment will generally

have to be made by you to MFGA, or to you by MFGA, to

reflect any changes in the value of the CFD during that day.

Trading CFDs allows you to take leveraged “long” or “short”

positions without having to take or make delivery of the

underlying instrument or security. Instead, you provide

a Margin payment, the amount of which fluctuates daily

depending on the value of the CFD, as collateral.

Although the value of a CFD generally follows price

movements of the underlying instrument or security,

you have no right or obligation to acquire or deliver the

underlying instrument or security itself and no other rights of

holders of the underlying instrument or security.

1.2 Who trades in CFDs and why?

People trade in CFDs for a variety of reasons.

Some trade to speculate with a view to profiting from

fluctuations in the price or value of the underlying

instrument or security.

Others trade CFDs to hedge their exposures to other

instruments or securities.

CFDs also allow people to trade on a leveraged basis. You

are able to outlay a relatively small amount (in the form

of Initial Margin) to secure an exposure to the relevant

underlying instrument or security.

*Note: The risk of loss in trading in derivatives and/or leveraged products can be substantial. You should carefully consider whether trading such products is appropriate for you in light of your objectives, financial situation and needs.

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2. Description of Index and Commodity CFDs2.1 The issuer - MFGA

The Index and Commodity CFDs offered under this PDS are

issued by MF Global Australia Limited ABN 50 001 662 077

(MFGA).

2.2 Reference asset

The reference asset for each Index and Commodity CFD

offered under this PDS is a futures contract over an index or

commodity quoted on a major futures exchange in Australia,

the United States or elsewhere (Futures Contract). Please

refer to the MFGA website for specific details of the Index

and Commodity CFDs offered.

2.3 Opening a CFD Account

Before you enter into any Index and Commodity CFD with

MFGA you will be required to complete, sign and return a

CFD Client Agreement and open a CFD Account (if you have

not already done so). The offer or invitation to open a CFD

Account and enter into MFGA Index and Commodity CFDs

is only available to persons receiving the PDS (whether in

paper or electronic form) within Australia who are Australian

residents and who provide an Australian address when

making their application to open a CFD Account. MFGA

reserves the right to refuse to open a CFD Account for any

person. You must deposit the Minimum Deposit Amount as

notified to you by MFGA into your CFD Account to activate

your CFD Account.

You may deposit any foreign currency agreed to by MFGA

into your CFD Account. Each foreign currency balance held

in your CFD Account is operated as a separate Foreign

Currency Ledger.

2.4 Establishing an Index and Commodity CFD position

To enter into an Index and Commodity CFD transaction

you can contact MFGA either electronically, by phone, fax

or email or in any other manner acceptable to MFGA to

determine the Contract Price for the relevant Index and

Commodity CFD. MFGA will only provide the Contract Price

for an Index and Commodity CFD during the trading hours

specified in the contract specifications on the MFGA website.

MFGA will inform you of the Contract Price and the Initial

Margin rate and you may make an offer to enter into an Index

and Commodity CFD with MFGA based on those parameters.

Please note that minimum and maximum transaction sizes

and Lot Sizes may apply.

You must confirm with us that offers sent via email or fax

have in fact been received by us. MFGA will confirm any

Index and Commodity CFD transaction it enters into with you.

After you have offered to enter into an Index and Commodity

CFD with MFGA, until MFGA actually enters into the Index and

Commodity CFD (as determined by MFGA), you may notify

MFGA that you wish to cancel or vary that offer. MFGA may,

in its absolute discretion refuse to accept such cancellation

or variation and has no responsibility or liability to you if it is

unable to cancel or vary your offer.

MFGA may at any time notify you of an exposure limit beyond

which you may not be authorised to enter into further Index

and Commodity CFDs.

Under the CFD Client Agreement, MFGA has sole discretion

whether or not to accept an offer from you to enter into

an Index and Commodity CFD. MFGA may refuse to enter

into an Index and Commodity CFD for a variety of reasons,

including, for example, where you have exceeded limits

imposed by MFGA on your CFD Account or where MFGA does

not hold sufficient cleared funds from you for the amount of

the Initial Margin.

You can take both “long” and “short” Index and Commodity

CFD positions. If you take a long position, you will generally

profit if the price of the underlying Futures Contract rises, and

you will generally make a loss if the price of the underlying

Futures Contract falls. Conversely, if you take a short position,

you will generally profit if the price of the underlying Futures

Contract falls, and you will generally make a loss if the price

of the underlying Futures Contract rises.

Under the CFD Client Agreement, MFGA has the right to

cancel any Index and Commodity CFD which involves or is

based on a manifest error, including without limitation, an

error in the Contract Price. MFGA also has the right to amend

the terms of an Index and Commodity CFD to reflect terms

which MFGA considers in its sole discretion acting in good

faith to be the correct terms.

The Open Contract Value of an Index and Commodity CFD,

any applicable commissions and all debits and credits in

respect of an Index and Commodity CFD, and the Contract

Value and Closing Value of an Index and Commodity CFD are

denominated in the Relevant Currency. When you first open

an Index and Commodity CFD position, if you do not have a

Foreign Currency Ledger in your CFD Account in the Relevant

Currency, MFGA will establish a Foreign Currency Ledger in

your CFD Account in the Relevant Currency for the purpose of

recording all debits and credits in respect of open Index and

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Commodity CFD positions in such currency. Any deposit

which you make to, or which is held in, your CFD Account

in a Relevant Currency will be recorded in the Foreign

Currency Ledger.

MFGA will apply a spread, known as the MFGA Spread, when

it quotes prices to you to buy or sell an Index and Commodity

CFD position. The MFGA Spread is in addition to any buy/sell

spread or similar spread which may apply to the underlying

Futures Contract on the Relevant Exchange. See Section 5.1

for more information.

The MFGA Spread will vary in respect of each Index and

Commodity CFD. For information on the MFGA Spread

applicable to a particular Index and Commodity CFD, please

refer to the MFGA website.

In respect of a Rolling CFD, the price MFGA quotes to you

to buy or sell a Rolling CFD will also be affected by the

application of a Fair Value component. See section 5.3 for

more information

Commission may also be charged on each CFD transaction

when you enter into a CFD and when you close out a CFD.

Minimum transaction commissions (also referred to as

minimum tickets) may also apply. See section 5.2 for

more information.

2.5 Margins

Entry into Index and Commodity CFDs involves the payment

of Margin. There are three components of Margin that you

may be required to pay in connection with each Index and

Commodity CFD: Initial Margin, Variation Margin, Additional

Margin.

2.5.1 Initial Margin

The Initial Margin which is payable in respect of an Index

and Commodity CFD will fluctuate daily depending on

the Contract Value of the Index and Commodity CFD and

will be debited from your CFD Account. The Initial Margin

represents the security deposit that you are required

to provide to MFGA when you first open an Index and

Commodity CFD position (and thereafter throughout the term

of an Index and Commodity CFD). The Initial Margin rate

applicable to each Index and Commodity CFD is determined

by MFGA in its sole discretion. It is typically 2% to 15%of

the Contract Value of the Index and Commodity CFD but may

be as high as 100% of the Contract Value depending on the

volatility and liquidity of the underlying Futures Contract.

MFGA may vary the Initial Margin rate at any time and will

notify you of the new Initial Margin rate by telephone,

electronic message or email, on our website, or in any other

manner acceptable to MFGA.

MFGA may apply the opening balance of your CFD Account or

any other Free Equity in your CFD Account to the payment of

Initial Margin in respect of an Index and Commodity CFD. For

this purpose MFGA may notionally convert the currency of

the opening balance of your CFD Account or other Free Equity

in your CFD Account to the Relevant Currency using the

Exchange Rate quoted by MFGA (see section 2.7). MFGA will

determine in its absolute discretion whether the Free Equity

in your CFD Account is sufficient to satisfy the Initial Margin.

An indication of the Initial Margin rate which may apply to

certain types of Index and Commodity CFD transactions can

be obtained from the MFGA website, our electronic trading

platform or from your adviser.

2.5.2 Variation Margin

Following close of the financial market of the Relevant

Exchange each Local Business Day during the term of

an Index and Commodity CFD, MFGA (as the calculation

agent) will determine the Contract Value of the Index and

Commodity CFD. This will ordinarily be determined by

reference to the closing price of the underlying Futures

Contract quoted by the Relevant Exchange (but may not be

the actual closing price quoted by the Relevant Exchange,

due to the application of the MFGA Spread and, in the

case of Rolling CFDs, the Fair Value component). Where

trading in the underlying Futures Contract is suspended or

halted by the Relevant Exchange, the Index and Commodity

CFD position will be valued, and a closing price will be

determined by MFGA in its discretion.

If the Contract Value calculated by MFGA is greater than the

Contract Value calculated by MFGA on the previous Local

Business Day and you hold a “short” position in the Index

and Commodity CFD, MFGA will debit the difference between

the values from the relevant Foreign Currency Ledger in your

CFD Account. If the Contract Value is less than the Contract

Value calculated by MFGA on the previous Local Business

Day and you hold a “short position” MFGA will credit the

difference between the Contract Values to the relevant

Foreign Currency Ledger in your CFD Account.

If the Contact Value calculated by MFGA is greater than the

Contract Value calculated by MFGA on the previous Local

Business Day and you hold a “long” position in the Index

and Commodity CFD, MFGA will credit the difference between

the Contract Values to the relevant Foreign Currency Ledger

in your CFD Account. If the Contract Value is less than the

Contract Value calculated by MFGA on the previous Local

Business Day, MFGA will debit the difference between the

Contract Values from the relevant Foreign Currency Ledger in

your CFD Account.

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Any such amounts debited or credited to your CFD Account

are referred to as Variation Margin.

2.5.3 Additional Margin

MFGA may require the payment of additional funds during

the term of the Index and Commodity CFD contract, in

addition to the Initial Margin and Variation Margin. This

is referred to as Additional Margin. MFGA will determine

the amount of any Additional Margin required in its sole

discretion. Without limiting its right to call Additional

Margin, MFGA may call Additional Margin:

• iftheGrossLiquidationValueinyourCFDAccountfalls

below AUD1,000 or foreign equivalent (as determined

by MFGA in its sole discretion). The Gross Liquidation

Value (GLV) is the amount of money you would have in

your CFD Account were you to close out all positions

at the current market price (less any transaction

charges or adjustments). This is calculated by MFGA

on an aggregate basis across all your open Index and

CommodityCFDpositionsinAUD;or

• iftheFreeEquityinyourCFDAccountisnotsufficientto

meet all payments when due. The Free Equity balance

of your CFD Account is the GLV less the Initial Margin,

Additional Margin and any fees and interest amounts

payable by you to MFGA in connection with an Index and

Commodity CFD. Free Equity will be calculated by MFGA

in AUD on an aggregate basis across all your open Index

and Commodity CFD positions and can be utilised to

enter into further Index and Commodity CFD positions or

can be withdrawn from your CFD Account, in AUD or in

a desired foreign currency, if MFGA consents in its sole

discretion to such withdrawal. If you also enter into any

other Index and Commodity CFD transactions with MFGA,

any other open Index and Commodity CFD positions will

also be included in determining the Free Equity in your

CFD Account.

The amount of Additional Margin called will generally be

the amount required to make the Free Equity in your CFD

Account positive.

2.5.4 Payment of Margin

MFGA will notify you of any obligation you have to pay Initial

Margin, Variation Margin or Additional Margin by telephone,

electronic message or email, or in any other manner

acceptable to MFGA.

If the funds in your CFD Account are sufficient to cover

any amount payable by you to MFGA, MFGA will debit your

account (and, if applicable, the relevant Foreign Currency

Ledger) for the amount of Margin payable.

If the funds in your CFD Account are insufficient to cover any

amount payable by you to MFGA, you must pay to MFGA the

specified amount in AUD or the Relevant Currency in cleared

funds within 24 hours, although in some situations MFGA

may notify you that it requires payment within a shorter time

period (for example when there is unusual volatility).

If you fail to make Margin payments within the time specified

by MFGA, MFGA may close out open Index and Commodity

CFD positions without further notice to you. MFGA may in its

discretion close out only some of the Index and Commodity

CFDs relating to a particular Index and Commodity CFD

position. For example, if you have an open position of

1,000 Index and Commodity CFDs, MFGA may close out

your position in relation to 700 Index and Commodity CFDs,

leaving an open position of 300 Index and Commodity CFDs.

When MFGA is required to make a payment to you (for

example, a payment of Variation Margin) MFGA will credit

that amount to your CFD Account (and, in the case of a

payment in a currency other than AUD, MFGA will credit the

relevant Foreign Currency Ledger in your CFD Account).

2.6 Closing an Index and Commodity CFD

Index and Commodity CFDs may be closed in a variety of

circumstances, as described below. A Last Dealing Time and

MFGA Expiry Date will apply to Expiring CFDs. These concepts

do not apply to Rolling CFDs. Please see section 2.6.3 below

for more information.

2.6.1 You wish to close an Index and Commodity CFD

Since the Index and Commodity CFDs are issued by MFGA

“over the counter” and not through a stock exchange or

futures exchange, each Index and Commodity CFD is a

contract between you and MFGA and can only be closed in

accordance with the terms of the CFD Client Agreement or as

otherwise agreed between you and MFGA. It is not possible

to close an Index and Commodity CFD by giving instructions

to another broker or Australian financial services licensee.

To close an Index and Commodity CFD position, you should

contact MFGA on a Local Business Day (during market hours

of the Index and Commodity CFD as set out in the contract

specifications on the MFGA website), either electronically, by

telephone, fax or email, or in any other manner acceptable

to MFGA, to determine the Contract Price for the relevant

Index and Commodity CFD. For Expiring CFDs this must be

done before the Last Dealing Time for that Expiring CFD.

Rolling CFDs are not subject to a Last Dealing Time and will

not be closed until you or MFGA decide to close the Rolling

CFD as discussed in this section 2.6. If you seek to close

a CFD, MFGA will confirm the Contract Price and you will

then decide whether to accept the price, and if so, you will

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instruct MFGA to close your open Index and Commodity CFD

position on the basis of that price. You must confirm with

us that instructions sent via email or fax have in fact been

received by MFGA.

You may not be able to close out an Index and Commodity

CFD if there is a suspension of trading or a trading halt in

respect of the underlying Futures Contract to which an Index

and Commodity CFD applies. In such a circumstance, MFGA

may decide in its absolute discretion not to close an Index

and Commodity CFD. See section 2.10 for more information.

2.6.2 MFGA wishes to close an Index and Commodity CFD

MFGA has the right to close out an Index and Commodity CFD

in certain circumstances. This includes:

• theoccurrenceofanadjustmentevent(seesection2.9

formoreinformation);

• theoccurrenceofadefaultevent(seesection2.14for

moreinformation);

• iftheaggregateamountofVariationMarginpayableby

you exceeds 50% of the Initial Margin in respect of that

IndexandCommodityCFD;

• ifyouhavebreachedanexposurelimitsetbyMFGA;

• iftheGLVofyourCFDAccountfallsbelowAUD1,000(or

foreigncurrencyequivalentasdeterminedbyMFGA);

• MFGA’sHedgeCounterpartyinaHedgePositionunwinds

or closes out the Hedge Position or for any other reason

MFGA is unable to establish a Hedge Position or no longer

abletomaintaintheHedgePosition;

• iftheCFDClientAgreementisterminated;or

• ifitbecomesillegalorimpracticalforMFGAtocontinueto

make Index and Commodity CFDs available to you.

You should refer to the CFD Client Agreement for more

information.

2.6.3 Expiring CFDs - Close out of an Expiring CFD at MFGA Expiry Date

If you do not elect to close out an Expiring CFD before the Last

Dealing Time for that CFD, MFGA will close out the CFD on the

MFGA Expiry Date. Please refer to the MFGA website or call

the MFGA dealing desk to find out the Last Dealing Time and

MFGA Expiry Date for any given Expiring CFD contract.

The Closing Price for an Expiring CFD closed out on the MFGA

Expiry Date will be the Contract Price calculated by MFGA at

that time.

There is no MFGA Expiry Date in respect of Rolling CFDs.

2.6.4 Rolling CFDs – “rolling” to the next underlying Futures Contract in a series

If a Rolling CFD is not closed out as discussed elsewhere in

section 2.6, MFGA will “roll” the Rolling CFD from the current

Futures Contract to the next Futures Contract in the relevant

series shortly before expiry of the current Futures Contract.

For the avoidance of doubt, the process of rolling does not

result in you entering into a new agreement and the existing

Rolling CFD will continue to exist until it is closed out in

accordance with the CFD Client Agreement.

This process of rolling into the next Futures Contract in the

relevant series will continue until the CFD is closed out by

you or MFGA as described in this PDS.

2.6.5 Consequences of an Index and Commodity CFD being closed out

On the day the Index and Commodity CFD is closed out,

MFGA will calculate, in the Relevant Currency, the remaining

payment rights and obligations of you and MFGA based on

the difference between the Closing Value of the Index and

Commodity CFD and the Open Contract Value of the Index

and Commodity CFD. The amount payable by you to MFGA

or by MFGA to you on close out of the Index and Commodity

CFD will be determined by MFGA in the Relevant Currency

after taking into account the Initial Margin, any Variation

Margin and any Additional Margin which has already been

debited from or credited to your CFD Account in respect of

that Index and Commodity CFD. This amount is payable in

the Relevant Currency.

Under the terms of the CFD Client Agreement MFGA will

credit to the relevant AUD or Foreign Currency Ledger in your

CFD Account any amounts payable by MFGA to you. If there

is an adjustment event affecting the underlying Futures

Contract at the time an Index and Commodity CFD is closed

out, there may be a delay in MFGA crediting your account.

See the CFD Client Agreement for more information.

If an amount is payable by you to MFGA it will be debited from

your CFD Account. If you do not have a credit balance in the

relevant AUD or Foreign Currency ledger or such balance is

insufficient to cover the amount payable, MFGA may apply any

credit balance in any other Foreign Currency ledger, or AUD

ledger, in your CFD Account to the outstanding amount. Any

conversion will be at the Exchange Rate determined by MFGA.

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230511

If the funds in your CFD Account are insufficient to cover any

amount payable by you to MFGA, you must pay such amount

to MFGA, within 24 hours of being so advised (or within such

lesser period as MFGA may determine in its discretion) and

in such currency as MFGA may require. You should note that

MFGA may set off any money owed to you under the CFD

Client Agreement or any other agreement against any money

owed by you to MFGA.

The determination of the date on which an Index and

Commodity CFD is closed and the Closing Value of an Index

and Commodity CFD may be affected by certain events

including but not limited to:

• ifMFGAhasenteredintoaHedgePositioninrelation

to the Index and Commodity CFD, MFGA may take into

account whether its Hedge Counterparty closes the Hedge

Position and the price at which the Hedge Counterparty

does so in determining whether to close the Index and

Commodity CFD with you and the Closing Price of your

IndexandCommodityCFD;

• iftheIndexandCommodityCFDisoveranunderlying

Futures Contract which ceases to be quoted on the

Relevant Exchange or is suspended from quotation for

two consecutive Local Business Days (or such lesser

period as may be agreed with you), MFGA may elect

to close the Index and Commodity CFD and/or call

Additional Margin as determined by MFGA. If MFGA

elects to close the Index and Commodity CFD, MFGA

will determine the Closing Price and in making such

determination, will, in its discretion, have regard to a

number of factors including the last traded price of the

underlying Futures Contract on the Relevant Exchange.

If you hold a long position, the Closing Price determined

by MFGA may be zero. If the Closing Price is zero, through

payment of the Initial Margin, Variation Margin and

payments due on close out of the Index and Commodity

CFD, you will be required to pay MFGA an amount

representing 100% of the Contract Value of the Index and

Commodity CFD at the time you opened the Index and

CommodityCFD;and

• iftheIndexandCommodityCFDisoveranunderlying

Futures Contract in respect of which there is a suspension

of trading or a trading halt on the Relevant Exchange at

the time at which the Index and Commodity CFD is to be

closed out, MFGA will determine the Closing Price in its

discretion. If you hold a long position, the Closing Price

determined by MFGA may be zero. If the Closing Price

is zero, through payment of the Initial Margin, Variation

Margin and payments due on close out of the Index and

Commodity CFD, you will be required to pay MFGA an

amount representing 100% of the Contract Value of the

Index and Commodity CFD at the time you opened the

Index and Commodity CFD.

2.7 Currency Conversions

If an amount is payable by MFGA to you on the close out of

an Index and Commodity CFD, you may request that MFGA

converts such amount from the Relevant Currency into AUD.

You may also request that MFGA converts a balance in your

CFD Account from AUD to a foreign currency or from a foreign

currency into AUD, either to hold as a balance in your CFD

Account or for the purposes of withdrawal (in each case with

MFGA’s consent).

These conversions will involve foreign exchange contracts

within the meaning of the Corporations Act. MFGA is

authorized under its Australian financial services licence to

deal in foreign exchange contracts. Any conversion will be at

the Exchange Rate quoted by MFGA.

MFGA will charge you a fee in respect of each conversion

which will be debited from your CFD Account. The fee

payable by you in respect of each conversion will be in the

form of a spread on the Exchange Rate, known as a bid/

offer spread. The bid/offer spread will not exceed 50 points.

For example, if the published exchange rate for converting

AUD to USD is USD/AUD 0.75, the Exchange Rate MFGA may

quote to you could be as low as 0.7450.

2.8 Deposits and Withdrawals

In order to activate your CFD Account you must deposit at

least the Minimum Deposit Amount into your CFD Account.

Once the CFD Account has been activated there is no

minimum account balance required. However, if you enter

into an Index and Commodity CFD you must ensure that the

amount in your CFD Account is sufficient to meet all payment

obligations when due.

You may request a withdrawal of funds from your CFD

Account by contacting MFGA either electronically, by

telephone, fax or email, or in any other manner acceptable

to MFGA. If MFGA receives a withdrawal request it will

determine in its absolute discretion whether to agree to such

a withdrawal.

In particular, MFGA may not permit the withdrawal of funds if

you did not have sufficient Free Equity in your CFD Account, if

you had outstanding payment obligations to MFGA such that

the withdrawal would result in the Free Equity being insufficient

to cover such obligations and also if MFGA considers that the

volatility of your CFD positions is such that a revaluation of

your positions at then current market prices would, or would be

likely to, result in MFGA calling further Margin from you.

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2.9 Adjustments / Corporate Actions

If an adjustment is made to a Futures Contract by a Relevant

Exchange or its clearing facility, MFGA will generally make a

corresponding adjustment to any Index and Commodity CFDs

over that Futures Contract. MFGA has a broad discretion

under the CFD Client Agreement to adjust the parameters of

an Index and Commodity CFD in such circumstances. Any

such adjustment will be made by MFGA, having regard to

a variety of factors including the adjustment made by the

Relevant Exchange or clearing facility, any adjustment made

by MFGA’s Hedge Counterparty, and what MFGA considers

a reasonable position to ensure the Index and Commodity

CFD, as adjusted, reflects as nearly as reasonably practical

the adjusted Futures Contract.

Separately from the adjustments referred to above, Rolling

CFDs are also subject to Dividend Adjustments. See section

5.4 for more information.

2.10 Trading Halts, Suspensions and Delistings

An underlying Futures Contract may be suspended, delisted

or subject to a trading halt on the Relevant Exchange in

various circumstances. In these circumstances, MFGA may,

in its absolute discretion, cancel your order in respect of

an Index and Commodity CFD transaction which has not yet

been opened, may close any Index and Commodity CFD,

or may refuse to close an Index and Commodity CFD, if you

make such a request.

2.11 Tax

See section 6 of this PDS for a general summary of the

Australian taxation issues relevant to Index and Commodity

CFDs offered by MFGA.

2.12 Bans in respect of particular Futures Contracts

MFGA may at any time determine, in its absolute discretion,

that it will not permit the entry into Index and Commodity

CFDs over one or more underlying Futures Contracts.

2.13 Conditional Orders

A conditional order is an order that will only be executed

when a specified condition(s) are met. For example, you

could place an order to enter into an Index and Commodity

CFD when the Contract Price reaches a certain level.

Alternatively, you may enter an order to close out an Index

and Commodity CFD when the Contract Price falls to a certain

level (commonly known as a “stop loss” order).

It is important to understand that conditional orders

(including “stop loss” orders) are not guaranteed and there

may be times when MFGA does not execute your order

despite the underlying Futures Contract trading at the level

specified in the order. This may occur due to, for example,

the application of the MFGA Spread (and, in the case of

Rolling CFDs, Fair Value) or volatile movements in the price of

the underlying Futures Contract. Also, if the price of a Futures

Contract moves suddenly, MFGA may be unable to execute

an order at the level specified, or may execute your order at a

level different to that specified by you. You may suffer losses

as a result. You should monitor your conditional orders and

contact MFGA if you believe that your order has not been

executed correctly or the parameters of your order have been

met. MFGA will not be liable for any orders, including any

conditional orders, which are not executed.

2.14 Default Powers

MFGA has extensive powers under the CFD Client Agreement

to take action in a range of “default event” situations. It is a

default event if:

• anymoneyowingbyyouundertheCFDClientAgreement,

any other agreement or on any other account you hold

withMFGAisnotpaidtoMFGAwhenitisdue;

• youfailtodulyandpunctuallyperformandobserveany

obligation under the CFD Client Agreement, any other

agreement or any obligation you have on any account you

holdwithMFGA;

• youmakeamisleadingorincorrectrepresentation;

• youstoppaymentsofyourdebtsorceaseorthreatento

ceasetocarryonabusiness;

• youenterintoorproposetoenterintoanyscheme

of arrangement or compromise with your creditors or

call a meeting to discuss a contemplated scheme of

arrangementorcompromise;

• youbecomeinsolventor,ifyouareacorporateclient,

a receiver or a receiver and manager or administrator is

appointedtoyouoranyofyourassets;

• ifyouareacorporateclient,aresolutionispassedora

petition is presented or an order is made for your winding

uporliquidation;

• youdieorbecomeunsoundofmindorabankruptcy

noticeisissuedagainstyou;

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• anysecuritycreatedbyanymortgageorchargebinding

upon you or your assets becomes enforceable and the

mortgageeorchargeetakesstepstoenforcethesecurity;

• anyguaranteeoforsecurityforyourobligationsis,

without the consent of MFGA, withdrawn or becomes

defectiveorinsufficient;

• anyofyourindebtednessbecomesimmediatelydueand

payable, or becomes capable of being declared due and

payable, before its stated maturity, by reason of your or

anyotherperson’sdefault;

• intheabsenceofyourmakingalternativearrangements,

you are not contactable by telephone for 24 hours in

order for MFGA to obtain instructions with respect to an

IndexandCommodityCFD;

• youareinbreachofanyexposurelimitsetbyMFGA;or

• anywar,hostilities,terroristattack,industrialaction,civil

unrest, natural disaster, power of telecommunications

failure, government restrictions or exchange controls

occur which in the view of MFGA has or may have a

material impact on the underlying Futures Contract or

Relevant Exchange.

If any default event occurs in relation to you, MFGA has the

right and power (but not the obligation) to do any one or

more of the following without the necessity to give prior

notice to you:

• terminatetheCFDClientAgreement;

• closeoutalloranyofyourIndexandCommodityCFD

positions;

• treatalloranyIndexandCommodityCFDsashavingbeen

closedoutbyyou;

• terminateanyotheragreementoranyaccountbetween

youandMFGA;

• cancelanyoutstandingordersinordertocloseyourCFD

Accountorotheraccount(s);

• satisfyanyobligationyouhavetoMFGAoutofany

property, money or security belonging to you in MFGA’s

controlorcustody;

• satisfyanyobligationyouhavetoMFGAbytransferring

fundsfromyourotheraccountswithMFGA;or

• exerciseanyotherpowerorrightwhichMFGAmayhave

under the CFD Client Agreement or in law or in equity or

take such other action as a reasonably prudent financial

services licensee would take in the circumstances

2.15 Rights of MFGA

In order to discharge any obligations you have under the

terms of the CFD Client Agreement MFGA may at any time,

without notice to you, apply all or part of any monies in any

currency held by MFGA in your CFD Account in such manner

as MFGA thinks fit. MFGA may also combine or consolidate

all of any of your accounts held with MFGA and it may convert

any currency held by you into a currency in which a payment

is due by you in order to settle any payments that are due.

For the purpose of determining any amount in AUD

(including, without limitation, the GLV or Free Equity in your

CFD Account) or any other currency in connection with an

Index and Commodity CFD, MFGA may convert any amount

into another currency using any Exchange Rate selected by

MFGA in its sole discretion. In the absence of a manifest

error such conversions will be binding on you and MFGA.

2.16 Termination of the CFD Client Agreement

Either you or MFGA may terminate the CFD Client Agreement

on two Sydney Business Days’ notice. The CFD Client

Agreement will continue to apply in relation to any open

Index and Commodity CFDs, but you must notify MFGA within

five Sydney Business Days of the date of termination of the

CFD Client Agreement that you wish to close all existing

Index and Commodity CFDs. If any Index and Commodity

CFDs are not closed out within such five Sydney Business

Day period or such other time agreed between you and

MFGA, MFGA may close out those Index and Commodity

CFDs as if a default event had occurred.

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3. Significant BenefitsPotential benefits of Index and Commodity CFDs may

include:

• Hedging: You can use Index and Commodity CFDs to

hedge exposure to a diversified portfolio of single stocks,

or to hedge any unwanted exposure to macro risks which

may be inherent in your equity portfolio, such as market

or commodity risk. Given the extended trading hours

of Index and Commodity CFDs, you can execute these

hedges for your equities portfolio even when equities

markets may be closed. You may also wish to use

Index and Commodity CFDs to hedge an exposure to a

particular commodity.

• Speculation: You can use Index and Commodity CFDs

for speculation with a view to profiting from market

fluctuations.

• Market positions and strategies: You can potentially

profit (and lose) from both rising and falling markets

depending on the strategy you have employed. Strategies

may be complex and may have different levels of risk

associated with each strategy.

• Diversification: Trading Index and Commodity CFDs offers

the potential for greater portfolio diversification, allowing

for diversification geographically and across different

asset classes.

• Leverage: Index and Commodity CFDs involve a high

degree of leverage. Index and Commodity CFDs enable

you to outlay a relatively small amount of money (in

the form of Initial Margin) to secure an exposure to the

underlying Futures Contract or the assets which are the

subject of the Futures Contract. This leverage can work

against you as well as for you. The use of leverage can

lead to large losses as well as large gains. See section 4

for further information on risks.

• Smaller position size: Index and Commodity CFDs

may have smaller contract sizes than the underlying

Futures Contracts, allowing you to be more precise when

executing your investment strategies.

• No expiry on Rolling CFDs: Rolling CFDs do not have a

fixed expiry date which allows for more convenience and

flexibility than trading Expiring CFDs or the underlying

Futures Contract.

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4. Significant Risks• External market forces: Financial markets can change

rapidly. Prices of instruments such as underlying Futures

Contracts depend on a number of factors including

interest rates, demand and supply and actions of

government and central banks. International markets

may be more volatile than the Australian market,

particularly in relation to developing markets. In some

cases underlying Futures Contracts may be suspended

from trading or have their quotations withdrawn from

the exchange where they are traded. These factors will

directly affect an Index and Commodity CFD’s value.

• Loss of Margin: You could sustain a loss greater than

the Initial Margin required to establish and maintain an

Index and Commodity CFD position. In addition you could

be required to pay further funds representing losses and

other fees on your open and closed Index and Commodity

CFD positions. For example, if the Initial Margin payable

at the time an Index and Commodity CFD is opened is

AUD1,000 and the market moves against your position

you could lose much more than the initial AUD1,000 you

outlaid to open the position.

• Payment of losses and Variation Margin: If the Contract

Price moves against your Index and Commodity CFD

position you may be required, at short notice, to deposit

a Variation Margin with MFGA in order to maintain your

position. The amount of the Variation Margin may be

substantial. If you fail to provide those additional funds

when required, your position may be liquidated at a loss

and you will be liable for any shortfall in your CFD Account

resulting from that failure. Positions are marked to market

on a daily basis with payments being settled daily to

account for market movements.

• Additional Margin: MFGA may require the payment

of Additional Margin during the term of an Index and

Commodity CFD, in addition to the Initial Margin and

Variation Margin. Additional Margin must be paid to MFGA

within 24 hours or such lesser time as required by MFGA.

• Leverage: The high degree of leverage that is involved

in Index and Commodity CFDs because of small Margin

requirements can work against you as well as for you.

The use of leverage can lead to large losses as well as

large gains.

Investment in Index and Commodity CFDs is speculative, carries a high level of risk and returns are volatile. You should seek independent advice and consider carefully whether Index and Commodity CFDs are appropriate for you given your experience, financial objectives, needs and circumstances. Some of the significant risks involved in trading Index and Commodity CFDs include:

• Credit risk: MFGA is the counterparty to any CFDs that

you may enter into under this PDS. MFGA’s obligations

in respect of those CFDs are not guaranteed by MF Global

Holdings Ltd or any other entity. Accordingly, you take

the risk that MFGA may not be able to meet its obligations

in respect of any CFD that it enters into with you. If MFGA

were to become insolvent or otherwise unable to pay its

debts it may be unable to meet its obligations to you in

whole or in part, or there may be a delay in MFGA fulfilling

its obligations to you. It is important that you understand

the risks of this counterparty relationship. To assist you

to assess counterparty risk, a copy of MFGA’s most recent

financial statements lodged with ASIC is available from

MFGA on request, free of charge.

• Client Money: Even though money to which you are

entitled in respect of your CFD Account may be paid into

a segregated account, this may not afford you absolute

protection. First, within the segregated account, all client

funds are pooled together and so an individual client

balance may not be protected if there is a default in the

overall segregated account balance. Secondly, if you have

incurred Margin obligations to MFGA, your client funds

will be paid to MFGA to meet those obligations. Thirdly,

to the extent that MFGA has used client funds to meet

obligations incurred by MFGA in respect of its hedging

activities (see section 7.3) there is an exposure to

counterparty risk in relation to both MFGA and, indirectly

to the Hedge Counterparty, in relation to those funds. For

these reasons you are exposed to the risk that you may

not receive all money to which you are entitled if there is

a deficit in the client money account and MFGA becomes

insolvent or is otherwise unable to pay any amount owing

to you.

• Operational risk: Operational risk is inherent in every

Index and Commodity CFD transaction. For example,

disruptions in MFGA’s operational processes such as

communications, computers, computer networks or

external events may lead to delays in the execution and

settlement of a transaction.

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• MFGA’s powers on default, indemnities and limitations on liability: If you fail to pay, or provide security

for, amounts payable to MFGA or fail to perform any

obligation included in the CFD Client Agreement, or any

other default event occurs, MFGA has extensive powers

to take steps to protect its position. These powers

include the power to close out positions and the power

to charge default interest. See sections 2.14 to 2.16 for

further information. Under the CFD Client Agreement you

also indemnify MFGA and its employees, agents and

representatives against certain losses and liabilities.

Further, MFGA’s liability to you is expressly limited.

You should read the CFD Client Agreement carefully to

understand these matters.

• Liquidity: Under certain conditions, it may become

difficult or impossible for you to close out a position.

This can happen when there is a significant change in the

Contract Price over a short period. Some international

markets may have lower trading volumes than the primary

international markets. This may increase the risk that the

liquidity of the underlying Futures Contract is decreased

or removed.

• Political risk: Political changes in a country can have

a significant impact on the value of underlying Futures

Contracts quoted on an exchange in such country.

Political risks may arise, for example, from a change

in government, change in economic policy, trade

restrictions, nationalization of industries or instability in

the region.

• Regulatory environment: The level of government

regulation in a country in which an underlying Futures

Contract is quoted may be less than the level of

regulation which applies in Australia. This may lead to

increased fluctuations in, and may adversely affect, the

value of an Index and Commodity CFD.

• Interest rate fluctuations: The interest rates that are

payable in relation to your CFD Account balance and

open Index and Commodity CFD positions will be affected

by fluctuations in the applicable interest rate specified

by MFGA for the currency in which your CFD Account is

denominated.

You should note that in relation to interest on credit

balances (discussed at section 5.6.1 of the PDS) MFGA

determines the applicable MFGA Base Rate and applies a

margin of up to 3.5%. After the margin has been applied

to the MFGA Base Rate, the actual interest rate applicable

may be zero, in which case you would receive no interest

even with the credit balance in the relevant currency.

You should further note that in relation to funding rates

paid on Rolling CFD short positions held overnight

(discussed at section 5.6.3 of the PDS) MFGA determines

the applicable MFGA Base rate and applies a margin up

to 3%. After the margin has been applied to the MFGA

Base Rate, the actual funding rate may be a negative rate.

If this is the case, MFGA will debit such amount from your

CFD account.

• Foreign exchange exposure: When you enter into an

Index and Commodity CFD, all Initial Margin, Variation

Margin, profits, losses, debits and credits in relation to

an Index and Commodity CFD are calculated, and are

payable, in the Relevant Currency. Accordingly, if you hold

a credit or debit balance in any Foreign Currency Ledger

in your CFD Account, you will be exposed to foreign

exchange rate fluctuations. In addition, upon closing an

Index and Commodity CFD position you will be able to

request that the foreign currency balance is converted to

AUD or any other foreign currency agreed to by MFGA. Any

conversion will be at the Exchange Rate quoted by MFGA.

Until the foreign currency balance is converted to AUD or

such other currency as you request, fluctuations in the

relevant foreign exchange rate may affect the ultimate

profit or loss made on the Index and Commodity CFD

position in AUD or such other currency. See Example 7 in

section 8 for illustrations of this.

Dealing in foreign currency related transactions can

expose you to foreign exchange risks between the time

the transaction is entered into and the time the relevant

conversion of currencies occurs. Foreign exchange

markets can change rapidly. Exchange rates depend

on a number of factors including for example, interest

rates, currency supply and demand and actions of

government. In some situations, exchanges of currency

may be suspended. There is always operational risk in a

foreign exchange transaction. For example, disruptions

in our operational processes such as communications,

computers and computer networks, or external events

may lead to delays in the execution and settlement of a

transaction. You should have regard to these risks when

considering Index and Commodity CFD transactions.

• Conditional Orders: A conditional order is an order that

will only be executed when a specified condition (or

conditions) are met. For example, you could place an

order to enter into an Index and Commodity CFD when

the Contract Price reaches a certain level. Alternatively,

you may enter an order to close out an Index and

Commodity CFD when the Contract Price falls to a

certain level (commonly known as a “stop loss” order).

It is important to understand that conditional orders

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(including “stop loss” orders) are not guaranteed and

there may be times when MFGA does not execute your

order despite the underlying Futures Contract trading at

the level specified in the order. This may occur due to,

for example, the application of the MFGA Spread (and,

in the case of Rolling CFDs, the Fair Value component) or

volatile movements in the price of the underlying Futures

Contract. Also, if the price of a Futures Contract moves

suddenly, MFGA may be unable to execute an order at

the level specified, or may execute your order at a level

different to that specified by you. You may suffer losses

as a result. You should monitor your conditional orders

and contact MFGA if you believe that your order has not

been executed correctly or the parameters of your order

have been met. MFGA will not be liable for any orders,

including any conditional orders, which are not executed.

• Involuntary close out: MFGA has the right to close out

an Index and Commodity CFD without your agreement,

in a number of circumstances. See section 2.6.2 for

further information. Accordingly, you may not be able

to anticipate or control the time at which an Index and

Commodity CFD position is closed out. It is possible

that close out may occur at a time when you do not have

sufficient funds in your CFD Account to cover payment of

any amounts required to be paid by you on close out of

the Index and Commodity CFD (including interest and any

other credits and debits).

• Loss due to spreads and commissions: Because of the

spreads (including the MFGA Spread) which exist in

respect of buying and selling Index and Commodity CFDs,

the price of an Index and Commodity CFD must move

in your favour by more than the amount of the relevant

spread before you can break even. See section 5.1 and

5.2 for more information.

• Restrictions on withdrawal of funds: In section 2.8 of

this PDS we mention that you may request a withdrawal of

funds and that MFGA has a discretion as to whether it will

allow a withdrawal. In particular, MFGA may not permit

the withdrawal of funds if you did not have sufficient

Free Equity in your CFD Account, if you had outstanding

payment obligations to MFGA such that the withdrawal

would result in the Free Equity being insufficient to cover

such obligations and also if MFGA considers that the

volatility of your CFD positions is such that a revaluation

of your positions at then current market prices would, or

would be likely to, result in MFGA calling further Margin

from you.

This is only a summary of the significant risks involved

in trading Index and Commodity CFDs. MFGA strongly

recommends that you obtain independent advice before

proceeding with any Index and Commodity CFD transaction.

You should also consider seeking independent advice before

entering into the CFD Client Agreement, as it is an important

legal document.

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5. Amounts Payable And Interest Paymentsrange;however,intimesofhighvolatility,thespreadsmay

exceed the above range.

The MFGA Spread reflects factors including without

limitation costs associated with hedging MFGA’s exposure

with a Hedge Counterparty, costs and taxes of MFGA entering

into CFDs with you, and a profit margin for MFGA.

The actual MFGA Spread applicable to any Index and

Commodity CFD can be found in the contract specifications

on MFGA’s website.

5.2 Commission

Commission may be charged on each CFD transaction when

you enter into a CFD and when you close out a CFD. Subject

to the comments regarding “minimum tickets” below, where

commission is charged, it will not be more than 100 basis

points (ie 1.00%) of the Open Contract Value (in respect of

commission payable when you enter a CFD), and 100 basis

points of the Closing Value of the CFD transaction (in respect

of commission payable when you close a CFD). If you enter

into CFD transactions with MFGA on a frequent basis, a

discount to the commission charged may be offered. You

should contact your adviser if you wish to discuss this.

The 100 basis points “cap” on commission described

above does not apply to very small transactions, because

MFGA imposes a “minimum ticket” or minimum amount of

commission which is payable in respect of CFD transactions.

The minimum commission will not exceed USD100.00 per

CFD transaction. You should contact your advisor to confirm

the actual amount of commission payable (if any).

5.3 Fair Value – Rolling CFDs

In respect of a Rolling CFD, the price MFGA quotes to you to

buy or sell a Rolling CFD will be affected by the application of

a Fair Value component.

The Fair Value component takes account of two factors, namely:

• theannouncedandanticipateddividends,distributions

and any other corporate actions (including for example

takeovers, mergers, demergers, share splits, bonus issues

and rights issues) to be paid by the entities making up the

relevant index covered by the underlying Futures Contract

(in this regard you should also note the operation of the

DividendAdjustment,discussedinsection5.4below);and

• theimplicitfundingcostthatisincludedinthepriceof

the underlying Futures Contract

If you instruct MFGA that you wish to enter into an Index

and Commodity CFD with MFGA you must pay all transaction

fees, Margins, settlements, interest and any other amounts

due under the CFD Client Agreement on demand by MFGA in

cleared funds or as otherwise required under the terms of

the CFD Client Agreement.

All payments made by you are to be made without any

set off by you, counter claim or condition and without

any deduction or withholding for any tax or any other

reason unless the deduction or withholding is required by

applicable law. If you are required to make a deduction or

withholding in respect of tax from any payment to MFGA, or

if MFGA is required to pay any tax in respect of any payment

made to you at your request, you must indemnify MFGA

against that tax and you must pay MFGA an additional

amount to ensure MFGA receives an amount that is equal to

the amount that MFGA would have received had a deduction

or withholding, or payment of tax, not been made.

In respect of each Index and Commodity CFD, all amounts

due to MFGA or payable by MFGA to you are payable in the

Relevant Currency, except that:

•youmayrequestawithdrawalfromtheFreeEquityinyour

CFD Account in AUD or such other currency as agreed to

byMFGA;and

•youmayrequestthat,afteranIndexandCommodityCFD

has been closed out, amounts payable into your CFD

Account by MFGA be converted by MFGA into another

currency agreed to by MFGA.

The CFD Client Agreement governs all payments made in

respect of Index and Commodity CFDs. You should also

be aware that MFGA may set off any money owed to you

under the CFD Client Agreement against any money owed by

you to MFGA under the CFD Client Agreement or any other

agreement that you have in place with MFGA.

5.1 MFGA Spread

MFGA will apply a spread, known as the MFGA Spread, when

it quotes prices to you to buy or sell an Index and Commodity

CFD position. The MFGA Spread is in addition to any buy/sell

spread or similar spread which may apply to the underlying

Futures Contract on the Relevant Exchange on which the

underlying Futures Contract is traded.

The MFGA Spread will generally be between 0.01 price

interest points and 100 price interest points. In times of low

volatility, the spreads may be even lower than the above

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The Fair Value component is applied to the price of the

underlying Futures Contract and may be a positive or

negative amount. The Fair Value component will change in

line with changes to the two factors listed above.

Fair Value is not applied to Expiring CFDs.

5.4 Dividend Adjustment – Rolling CFDs

A cash adjustment known as the Dividend Adjustment will

be applied to your CFD account if you hold an open Rolling

CFD at Business Close on the Local Business Day prior to the

ex-dividend or ex-distribution date for an ordinary dividend

or distribution in respect of a constituent of the index

covered by the relevant Futures Contract. The Dividend

Adjustment will usually be applied within two Local Business

Days of the relevant ex-dividend or ex-distribution date, or

in the case of a corporate action, the relevant date for that

corporate action as determined by MFGA, acting reasonably.

The Dividend Adjustment will reflect the cash amount of the

dividend, distribution or other corporation action and that

constituent’s weighting in the relevant index and will not

take into account any franking credits or similar amounts

(if applicable). You will generally receive a Dividend

Adjustment if you hold a long Rolling CFD and you will be

generally required to pay a Dividend Adjustment if you hold

a short Rolling CFD.

No Dividend Adjustment is made in respect of Expiring CFDs.

5.5 Electronic Trading Charges

Under the terms of the CFD Client Agreement if you have

access to MFGA’s CFD electronic trading platform, MFGA

is permitted to deduct any charges associated with that

platform from your CFD Account. The standard monthly fee

will not exceed AUD100 per month (exclusive of GST). To

access live prices via the electronic trading platform you

will be required to enter into an electronic order entry and

account access agreement with MFGA substantially in the

form attached to the CFD Client Agreement – you should

contact your adviser for details.

5.6 Interest

Interest is calculated and paid separately in respect of each

currency held in your CFD Account. The applicable interest

rate for debit and credit balances in a Relevant Currency

at any time is the current MFGA Base Rate plus or minus a

margin, as set out below. The actual interest rate margins

payable will be set by MFGA and communicated to you by

your adviser when you open your CFD Account and will be

published on MFGA’s website at

http://www.mfglobal.com.au/cfd-base-rates.html.

The MFGA Base Rate for each Relevant Currency is subject

to change as it is set by MFGA in its sole discretion, having

regard to the current money market rate in the jurisdiction of

the Relevant Currency.

5.6.1 Interest on CFD Account credit and debit balances

The rate of interest paid by MFGA in respect of a credit

balance of the Free Equity in your CFD Account in respect of

each Relevant Currency is the applicable MFGA Base Rate, in

each case minus a maximum of 3.5% per annum. The rate of

interest charged by MFGA in respect of a debit balance of the

Free Equity in your CFD Account in respect of each Relevant

Currency is the applicable MFGA Base Rate, in each case

plus a maximum of 4% per annum. The actual interest rate

margin is set by MFGA in its discretion and MFGA reserves

the right to adjust the margin. Interest is calculated daily and

posted monthly.

You should note that, as interest is calculated separately in

respect of each currency held in your CFD Account, even if the

aggregate Free Equity in your CFD Account is a credit balance,

you must pay MFGA debit interest in respect of each currency

in your CFD Account for which you have a debit balance.

In addition, although interest on credit balances of your Free

Equity is payable by MFGA, depending on the applicable

MFGA Base Rate, after the margin of up to 3.5% has been

applied to the MFGA Base Rate, the actual interest rate may

be zero, in which case you would receive no interest even

with the credit balance in the relevant currency.

If you do not pay any amount owing to MFGA on its due date,

under the CFD Client Agreement, default interest is payable

on the amount owing instead of debit balance interest (see

section 5.6.2).

5.6.2 Default Interest

MFGA is entitled under the terms of the CFD Client

Agreement to charge interest on any amount which you fail

to pay when it is due to be paid to MFGA. Default interest

will be charged in respect of each amount owing in the

currency in which such amount is payable from the date the

amount becomes due until the date the amount together

with interest is paid in full and is calculated daily and

compounded monthly at a maximum rate of the RBA Rate in

respect of AUD amounts or the applicable MFGA Base Rate

(in respect of any other amounts) in each case, plus 8% per

annum. The actual default interest margin is set by MFGA in

its discretion.

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5.6.3 Funding Rates on Contract Value of long and short open positions

No funding rates are paid or payable in respect of Expiring

CFDs.

For Rolling CFDs funding rates do apply for holding open CFD

positions past Business Close.

The funding rate you must generally pay MFGA in the event

you hold a long position in a Rolling CFD past Business Close

is the applicable MFGA Base Rate plus a maximum of 3% per

annum of the Contract Value of such long position.

The funding rate MFGA must generally pay you if you hold

a short position in a Rolling CFD past Business Close is

the applicable MFGA Base Rate less a maximum of 3% per

annum of the Contract Value of such short position.

You should note that, although MFGA must pay you

a funding rate if you hold a short position overnight,

depending on the applicable MFGA Base Rate, after the

margin has been applied to the MFGA Base Rate, the actual

funding rate may be a negative rate. If this is the case, MFGA

will debit such amount from your CFD account, meaning that

you will be required to pay MFGA a funding rate rather than

MFGA pay you a funding rate even though you are holding a

short position in a Rolling CFD past Business Close.

No funding rate is paid or received if you open and close

a Rolling CFD position before Business Close on the same

Local Business Day.

Funding rates are calculated as the number of CFDs you

hold multiplied by the price of the Rolling CFD at Business

Close multiplied by the applicable funding rate multiplied

by the applicable day count fraction for the Relevant

Currency (e.g. generally 1/360 or 1/365, depending on the

Relevant Currency).

The funding rate is usually calculated daily and debited

or credited to your CFD account on the following Sydney

Business Day. The funding rate payable by you is in addition

to any Variation Margin, debit interest or any other amounts

which you are required to pay (see sections 2.5).

For example, if you were holding a long Rolling CFD position

and the funding rate was 3% over the MFGA Base Rate

(say, 3.5%) you would be paying a funding rate of 6.5%

per annum. If the contract was for 10 AU200CASH and the

closing price was AUD4500 per CFD, the open position

value would be AUD45,000. The funding charge would

be approximately AUD8.01* for every day the contract is

maintained (AUD45,000 x 6.5% = AUD2,925 divided by 365).

As another example, if you were holding a short position in

a Rolling CFD and the funding rate was 3% under the MFGA

Base Rate (say, 3.5%) you would be paid a funding rate of

0.50% per annum. If the contract was for 10 AU200CASH and

the closing price was AUD4400 per CFD, the open position

value would be AUD44,000. The funding rate you would

receive would be approximately AUD0.60* for every day

the contract is maintained (AUD44,000 x 0.50% = AUD220

divided by 365).

As a further example, if you were holding a short position in

a Rolling CFD and the funding rate was 3% under the MFGA

Base Rate (say 0.16%) you would be paying a funding rate of

2.84% per annum. If the contract was for 5 US30CASH and

the closing price was USD12500 per CFD, the open position

value would be USD62,500. The funding charge would

be approximately USD4.93* for every day the contract is

maintained (USD62,500 x 2.84% = USD1,775 divided by 360).

*The exact amount of interest paid will vary each day,

depending on such factors as the closing price of the

underlying securities in your CFD portfolio, changes to the

holdings within your CFD portfolio and/or movements in the

MFGA Base Rate and changes by MFGA to the margin that is

applied to the MFGA Base Rate.

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6. Taxation

Entering into Index and Commodity CFDs may have tax

implications for you. Taxation law is complex and its

application will depend on your circumstances. MFGA

recommends that you consult your tax adviser when

determining if a product is suitable for you.

A general summary of the tax issues relevant to Index and

Commodity CFDs offered by MFGA is provided below in a

letter from Blake Dawson.

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Sydney Melbourne Brisbane Perth Canberra Port Moresby Shanghai Associated Office Jakarta

213259215_3 1

Level 36, Grosvenor Place 225 George Street Sydney NSW 2000 Australia

The Directors MF Global Australia Limited Level 21 Grosvenor Place 225 George Street SYDNEY NSW 2000

The Directors

MF Global Australia Limited – Index and Commodity Contracts for Difference Tax Summary

This letter has been prepared for the purposes of inclusion in the product disclosure statement dated on or about 23 May 2011 (PDS) issued by MF Global Australia Limited (MFGA) in respect of contracts for difference in respect of futures contracts over an index or commodity (CFDs). The tax information set out in this letter is based on the terms of the CFDs which will be entered into by MFGA and an investor as set out in the CFD client agreement.

This letter provides a summary of the main Australian income tax issues relevant to an Australian resident taxpayer who enters into a CFD in the course of carrying on a business or otherwise with the intention of making a profit (Investor). The taxation issues relevant to other investors are not addressed in this letter.

This tax summary is of a general nature only and does not take into account the specific circumstances of any particular Investor, or any elections that might be available to an Investor under the Income Tax Assessment Act 1936 or Income Tax Assessment Act 1997 (collectively referred to as the Act). As the taxation profile of each potential Investor is different, all Investors should seek their own independent advice in relation to the taxation implications of acquiring CFDs.

The representatives of Blake Dawson involved in preparing this letter are not licensed to provide financial product advice in relation to dealing in derivatives. Blake Dawson does not seek to recommend, promote or otherwise encourage any Investor to enter into the CFDs offered by MFGA under the PDS. The information provided in this letter does not take into account the objectives or circumstances of individual Investors and we recommend that Investors obtain their own independent advice before making any decision to enter into a CFD.

This letter is provided solely for the benefit of MF Global and may not be relied on by any other person, and is based on the Australian income tax laws and administrative practice applicable as at 9am (Sydney time) on the date of this letter. It should be noted that tax laws (and their interpretation by the Courts) and administrative practices change over time and this may impact upon the comments made in this letter. The comments in this letter are not binding on the Australian Taxation Office (ATO) and there is no assurance that the ATO will agree with the comments in this summary or that any contrary view of the ATO would not ultimately be upheld by a Court.

Capitalised terms not otherwise defined in this letter have the meaning given to them in the PDS.

T 61 2 9258 6000 F 61 2 9258 6999 DX 355 Sydney

Locked Bag No 6 Grosvenor Place Sydney NSW 2000 Australia

www.blakedawson.com

19 May 2011

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MF Global Australia Limited 19 May 2011

213259215_3 2

1. Overview

The ATO has issued Taxation Ruling (TR) 2005/15 outlining its views on the taxation treatment of contracts for difference. This ruling is a public ruling for the purposes of the Taxation Administration Act 1953 (Cth) and therefore, if the ruling applies to an Investor, the Commissioner of Taxation is bound to assess that Investor on the basis outlined in the ruling. Penalties may apply where the treatment outlined in the taxation ruling is not followed and the Investor has a tax shortfall.

In TR 2005/15, the ATO states that a gain from a CFD could give rise to assessable income and a loss from a CFD could be an allowable deduction, if:

(a) the investor entered into the CFD as an ordinary incident of carrying on a business; or

(b) the investor entered into the CFD as part of a business operation or as a commercial transaction for the purposes of profit making or more generally as part of a profit making scheme.

The paragraphs below are relevant to taxpayers in the above two categories. It is important to note that the comments in the paragraphs below have not been endorsed by the ATO, the ATO has not specifically listed CFDs over futures contracts in the ruling and the ATO's interpretation of the tax law as applying to a CFD could be different to that set out in the ruling. Accordingly we recommend all Investors seek independent advice on the taxation implications associated with the CFD.

In the ruling, the ATO noted that investors will generally be entering into and closing out CFDs within relatively short periods of time. It has been assumed in this letter that the Investor will enter into and close out the CFD within a short period of time and therefore the timing of assessable income and allowable deductions will not generally have a material impact on the Investor.

2. Taxation treatment of profits and income from a CFD

For a business Investor, profits from a CFD (profits) will be assessable if the Investor entered into the CFD as an ordinary incident of carrying on a business, or as part of the Investor's business operations. If the Investor is an individual (or other non-business) investor, the Investor's profits will be assessable if the CFD was entered into as a commercial transaction for the purpose of making a profit. The Investor's profits will be assessed when the CFD is closed out (which will occur when the CFD is closed out by the Investor or MFGA or (in the case of an Expiring CFD that has not previously been closed out) on the MFGA Expiry Date).

The amount of any profit should take into account the difference between the Closing Value and the Open Contract Value (translated into AUD as necessary under the foreign currency translation rules in the Act). Other items of assessable income may include: interest paid by MFGA on Free Equity (or other amounts) in an Investor's CFD account, funding rates received by an Investor in respect of Rolling CFD open positions and Dividend Adjustments received in respect of a long Rolling CFD. Investors should generally not be taxed on Variation Margins paid to them by MFGA, given that Investors have not derived that amount as income.

Interest or other amounts derived by an Investor and denominated in foreign currency will need to be translated into AUD under the foreign currency translation rules in the Act.

3. Taxation treatment of losses and deductions from a CFD

For a business Investor, generally speaking, losses from a CFD (losses) will be deductible if the Investor entered into the CFD as an ordinary incident of carrying on a business, or as part of the Investor's business operations. If the Investor is an individual (or other non-business) investor, the Investor's losses will generally be deductible if the Investor entered into the CFD as a commercial transaction for the purpose of making a profit. The Investor's losses will be deductible when the CFD is closed out (which will occur when the CFD is closed out by the Investor or MFGA or (in the case of an Expiring CFD that has not previously been closed out) on the MFGA Expiry Date).

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MF Global Australia Limited 19 May 2011

213259215_3 3

The amount of any loss should take into account the difference between the Closing Value and the Open Contract Value (translated into AUD as necessary under the foreign currency translation rules in the Act). Other items that may be recognised separately as deductions or which may enter the calculation of profits or losses include: interest paid by Investors on CFD account debit balances; funding rates paid by Investors in respect of Rolling CFD open positions; fees and commissions paid by Investors on the CFD; default interest paid by Investors on any unpaid amount due to MFGA; and Dividend Adjustments paid in respect of a short Rolling CFD. Depending on the particular circumstances of an Investor, amounts of funding rates, debit balance interest, fees and default interest may not be separately deductible in the year in which they are incurred, but rather may be factored into the calculation of a profit or loss realised on closing out a CFD. Investors would generally be unable to deduct any Initial Margin, Additional Margin or Variation Margin paid by them to MFGA, as these amounts are provided by Investors as collateral in respect of a CFD.

Interest or other expenses incurred by the Investor and denominated in foreign currency will need to be translated into AUD under the foreign currency translation rules in the Act.

4. Capital gains tax

The CFD will also be a capital gains tax asset for the purposes of applying the capital gains tax (CGT) provisions of the Act. However, to the extent that a capital gain arising as a result of a CGT event in relation to the CFD is included in an Investor's assessable income under a non-CGT provision, the capital gain resulting from that CGT event should generally be reduced by the amount of the assessable income. Similarly, to the extent that any loss under the CFD is deductible, this amount will not also contribute to a capital loss.

5. Taxation of financial arrangements

Division 230 of the Act operates to tax gains and losses (including foreign exchange gains and losses) arising from certain "financial arrangements" on revenue account and in some cases on a compounding accruals basis.

Investors that are individuals should be exempt from the application of Division 230 of the Act unless they make an election for it to apply. Other entities, including superannuation funds, managed investment schemes and financial entities, which are considered small may be exempt from the application of Division 230 of the Act unless they make an election for it to apply. As the application of Division 230 of the Act is dependent on the facts and circumstances of the Investor, Investors should obtain their own advice in relation to the potential applicability of Division 230 of the Act, in light of their own individual facts and circumstances.

6. Foreign Exchange Gains and Losses

In general terms, the foreign exchange provisions of the Act tax gains or losses arising due to differences in exchange rates between the date a right to receive or obligation to pay foreign currency (or an amount in Australian dollars calculated by reference to foreign currency) is recognised for tax purposes on the one hand, and the date that such right or obligation ceases on the other. Foreign exchange gains and losses can also arise when there is a disposal of foreign currency itself. Therefore, the foreign exchange provisions should be relevant where the Relevant Currency is in foreign currency or an amount payable to an Investor or payable by an Investor is otherwise calculated by reference to foreign currency.

A foreign exchange gain or loss can arise when a foreign exchange realisation event (FRE) occurs. The main FREs include:

(a) the disposal of foreign currency or a right to receive it;

(b) ceasing to have a right to receive, or an obligation to receive, foreign currency; and

(c) ceasing to have an obligation to pay, or a right to pay, foreign currency.

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213259215_3 4

Foreign exchange gains should generally be assessable, and foreign exchange losses should generally be deductible, to Investors unless they are made in gaining or producing income which is exempt from tax (e.g. if an Investor used a CFD to hedge exempt income). With some exceptions, foreign exchange gains and losses should not have any capital gains tax consequences.

A foreign exchange gain or loss may arise if, for example, foreign currency is credited to, or debited from, an Investor's CFD account as a result of transactions under the CFD.

Foreign exchange gains and losses recognised under the foreign exchange provisions of the Act are generally in addition to any assessable profit or income or deductible loss or expenses recognised under other provisions of the Act referred to in sections 2 and 3 above. To the extent that the same gain or loss would be included under more than one provision of the Act, it should only be included once as a foreign exchange gain or loss under the foreign exchange provisions of the Act.

The tax rules dealing with foreign exchange gains and losses are complex and there are a number of elections and methods which can be utilised by taxpayers to calculate foreign exchange gains and losses. Accordingly, Investors should obtain their own advice in relation to the application of these rules to their individual circumstances.

7. The impact of the general anti-tax avoidance provisions

The question of the applicability of the general anti-avoidance provisions in Part IVA of the Act (which can operate to cancel certain tax benefits) is something which can only be conclusively determined on a case-by-case basis in light of the relevant facts and circumstances arising for a particular taxpayer.

Investors should not be affected by the general anti-tax avoidance provisions contained in Part IVA of the Act, provided that all CFDs have not been entered into as part of a scheme with the dominant purpose of obtaining a tax benefit.

An Investor may be taken to have obtained a tax benefit if, very broadly, the tax outcomes under the scheme entered into by the Investor are more favourable than that which would, or might reasonably be expected to, have been the tax outcome if the scheme had not been entered into. However, even if a tax benefit has been obtained by an Investor, Part IVA can only apply if the scheme was entered into for the dominant purpose of obtaining that tax benefit. The existence of the dominant purpose should be determined on an objective basis, having regard to the list of relevant factual circumstances contained in Part IVA of the Act.

Yours faithfully

Blake Dawson

30

C230511

7.1 Contractual Terms

The relationship between you and MFGA is governed by the

CFD Client Agreement that you are required to enter into

before you open a CFD Account. MFGA will provide you with

a CFD Client Agreement to be executed by you and returned

to MFGA. You should note that the CFD Client Agreement

provides an indemnity by you to MFGA and its employees,

agents and representatives in respect of the execution of

your instructions, the occurrence of a default event, MFGA

exercising any of its rights or powers upon the occurrence of

a default event, any amount payable by you under the terms

of the CFD Client Agreement and anything lawfully done by

MFGA. For a copy of the CFD Client Agreement at any time

please contact MFGA. Contact details are set out in this PDS.

7.2 Confirmations and Statements

Confirmations, trading statements and month-end summary

statements are sent via e-mail. You must review any

confirmation or statement we send to you immediately upon

receipt to ensure its accuracy and report any discrepancies

to us.

MFGA will charge you for the following administration

services where requested by you or your representative.

The current rate which is normally charged is set out below.

However MFGA reserves the right to increase these charges

in its discretion without notice and you should contact your

adviser to confirm the applicable charge:

•duplicatehardcopyaccountstatements(AUD15perpage);

•copiesoftapedconversations(AUD15perhouroftapeper

retrieval);

•transcriptsoftapedconversations(AUD20perhouroftime

takentopreparetranscript);

•returnedchequefees(AUD30percheque);and

•bankconfirmations/auditcertificates(AUD15per

confirmation/certificate).

All the above amounts are exclusive of GST.

7. Other Important Information7.3 Client funds

MFGA will handle all client funds its receives in accordance

with, and subject to, the requirements of Part 7.8 Division

2 the Corporations Act. Where required by the Corporations

Act, client funds will be paid into a segregated account

maintained by MFGA with an Australian bank.

MFGA is entitled to withdraw client funds from the

segregated account in the circumstances and for the

purposes set out in the Corporations Act. For example, if you

incur a Margin obligation to MFGA, you will be required to

pay those Margin amounts to MFGA and your client funds

will be used to make that payment. Also, MFGA is entitled

to use client funds it receives in connection with Index and

Commodity CFDs (which are derivatives) for the purpose

of meeting obligations MFGA incurs in connection with

margining, guaranteeing, securing, transferring, adjusting

or settling dealings in derivatives by MFGA, including

dealings on behalf of other clients and, for example, to meet

obligations MFGA incurs in respect of its derivatives hedging

activities it undertakes to hedge its exposure to you and

other clients in relation to Index and Commodity CFDs.

Also, under the CFD Client Agreement you authorise MFGA

to deduct from the segregated account money to which you

are entitled, for the purposes of discharging obligations

which MFGA incurs to a Hedge Counterparty with whom

MFGA enters into derivatives to hedge its exposure to you in

connection with Index and Commodity CFDs or to hedge its

exposure to other clients who have entered into contracts for

difference with MFGA under agreements similar to the CFD

Client Agreement.

For example, even though you may deposit $10,000 with

MFGA and yourself incur Margin obligations to MFGA of

$4,000, some or all of the remaining $6,000 may have been

used by MFGA to meet obligations it incurs in respect of its

derivatives hedging activity.

It is therefore important for you to note that even though

your money may be paid into one or more segregated

accounts, this may not afford you absolute protection. First,

within the segregated account, all client funds are pooled

together and so an individual client balance may not be

protected if there is a default in the overall segregated

account balance. Secondly, if you have incurred Margin

obligations to MFGA, your client funds will be paid to MFGA

to meet those obligations. Thirdly, to the extent that MFGA

has used client funds to meet obligations incurred by MFGA

in respect of its hedging activities referred to above, there

31

230511

is an exposure to counterparty risk in relation to both MFGA

and, indirectly, to its Hedge Counterparty, in relation to

those funds. For these reasons you are exposed to the risk

that you may not receive all money to which you are entitled

if there is a deficit in the client money account and MFGA

becomes insolvent or is otherwise unable to pay any amount

owing to you.

You will receive account statements (see section 7.2

above). The statement will include information setting out

information such as cash balances and Free Equity. You

should note that a reference to a positive cash balance or

positive Free Equity does not mean that MFGA holds all or

any of that amount in a segregated account.

MFGA is entitled to retain any interest it earns on client

money held by MFGA in the segregated accounts it maintains

with a bank, approved deposit-taking institution and/or

exchange clearing house. The rate of interest is determined

by the organisations at which the client funds are held.

7.4 Hedging arrangements

When MFGA enters into Index and Commodity CFDs with

its clients, MFGA may, in turn, hedge its exposure to

those clients with a third party selected by MFGA (Hedge Counterparty). Transactions entered into by MFGA with a

Hedge Counterparty are referred to in this PDS as Hedge Positions. As noted in section 7.3 above, MFGA may use

funds from the segregated account to meet its obligations to

a Hedge Counterparty.

7.5 Disclaimer

Any reference in this PDS (or any document referred to in this

PDS) to a particular index or Futures Contract is included for

reference or illustrative purposes only. Other persons, such

as a Relevant Exchange, may have an interest in an index or

Futures Contract (for example, through the registration of a

trade mark in Australia or other jurisdictions). MFGA does

not hold itself out as having any proprietary or other interest

in any index or Futures Contract referred to in this PDS or any

other document referred to in this PDS.

32

C230511

8. Examples

The examples below are hypothetical scenarios of how an Index and Commodity CFD may operate. The amounts, figures and

outcomes are provided for illustrative purposes only and do not indicate actual values of an Index and Commodity CFD which may

be entered into with MFGA. You should consider the risks associated with Index and Commodity CFDs set out in section 4 of this

PDS and consult your financial, legal, taxation or other professional adviser before entering into an Index and Commodity CFD.

Example 1 – Expiring CFD - Long position which realises a profit.

Anthony believes that the Australian index will strengthen.

Anthony buys 10 AU200MAR10 (ASX SPI 200 Index March 2010 Contract) Expiring CFDs at 4,500, representing an exposure of AUD

10 per index point move. The position requires an Initial Margin of 5%. This example assumes that no commission is payable. The

impact on your return if commission were payable is set out at the end of this example below.

As Anthony predicted, the Australian Index rises. By mid afternoon, the AU200MAR10 has risen to 4,565, so Anthony decides to

take profit. He closes his position and makes a profit of AUD 650.

The total profit on this trade is AUD 650 (reflecting a return of 28.89% on initial outlay).

Open Long Position

Trade Buy AU200MAR10

Number of CFDs 10

Contract Price 4,500

Total Value AUD 45,000 Number of CFDs x Contract Price

Initial Margin AUD 2,250 5% of Total Value

Initial Outlay AUD 2,250

Close Long Position

Trade Sell AU200MAR10

Number of CFDs 10

Contract Price 4,565

Total Value AUD 45,650 Number of CFDs x Contract Price

Total Profit / Loss AUD 650 Closing Value per CFD – Open Contract Value per CFD

Return on Outlay 28.89% Total Profit/Loss divided by Initial Outlay

If commission had been payable on this trade at 0.10%, then a commission charge of AUD 45 would have been applied to open this position, and a commission charge of AUD 45.65 would have been applied to close this position. The Initial Outlay would have been AUD 2,295 resulting in a Total Profit of AUD 559.35, and a Return on Outlay of 24.37%.

33

230511

Example 1 - Account Entries - Anthony’s CFD Account will have the following entries (assuming he does not enter into any

other CFD transactions):

Description Total Cash Variation Margin GLV Initial Margin Free Equity

Day 1

Deposit of AUD on opening of account 20,000.00 20,000.00

Position opened at 4,500 -2,250.00 17,750.00

Current Price 4,565 20,000.00 650.00 20,650.00 -2,282.50 18,367.50

Position closed at 4,565 20,650.00Initial margin is released

20,650.00

34

C230511

Example 2 – Expiring CFD - Short position which realises a loss.

Sophie believes that the US index will weaken.

Sophie sells 20 US500MAR10 (S&P 500 Index March 2010 Contract) Expiring CFDs at 1,150 representing an exposure of

USD 20 per index point move. The position requires an Initial Margin of 8%. This example assumes that no commission is

payable. The impact on your return if commission were payable is set out at the end of this example below.

Unfortunately, Sophie was wrong and the US index pushes higher. By the end of the Local Business Day, the price has risen

to 1,155. The following day, US500MAR10 rises further, so Sophie decides to close her position. She closes her position at

1,162.25, and has made a loss of USD -245.

The total loss on this trade is USD -245 (reflecting a return of -13.32% on initial outlay), which remains in the USD ledger in

Sophie’s account until she instructs MFGA to transfer it back to her base currency (AUD).

Open Long Position

Trade Sell US500MAR10

Number of CFDs 20

Contract Price 1,150

Total Value USD 23,000 Number of CFDs x Contract Price

Initial Margin USD 1,840 8% of Total Value

Initial Outlay USD 1,840

Close Long Position

Trade Buy US500MAR10

Number of CFDs 20

Contract Price 1,162.25

Total Value USD 23,245 Number of CFDs x Contract Price

Total Profit / Loss USD -245 Open Contract Value per CFD – Closing Value per CFD

Return on Outlay -13.32% Total Profit / Loss divided by Initial Outlay

If commission had been payable on this trade at 0.10%, then a commission charge of USD 23.00 would have been applied to open this position, and a commission charge of USD 23.25 would have been applied to close this position. The Initial Outlay would have been USD 1,863.00, resulting in a Total Loss of USD -291.25, and a Return on Outlay of -15.63%.

35

230511

Exam

ple

2 - A

ccou

nt E

ntrie

s - S

ophi

e’s

CFD

Acc

ount

will

hav

e th

e fo

llow

ing

entr

ies

(ass

umin

g sh

e do

es n

ot e

nter

into

any

oth

er C

FD tr

ansa

ctio

ns):

AUD

Led

ger

U

SD L

edge

r

Desc

riptio

nTo

tal C

ash

Varia

tion

Mar

gin

GLV

Initi

al

Mar

gin

Free

Equ

ityTo

tal C

ash

Varia

tion

Mar

gin

GLV

Initi

al

Mar

gin

Free

Equ

ity

Day

1

Dep

osit

of A

UD

on

open

ing

of a

ccou

nt20

,000

.00

20,0

00.0

0

Posi

tion

open

ed a

t 1,1

500.

000.

00-1

,840

.00

-1,8

40.0

0

Posi

tion

at e

nd o

f Day

1,

reva

lued

at C

ontr

act P

rice

of 1

,155

-100

.00

(Var

iatio

n M

argi

n pa

yabl

e to

MFG

A)-1

00.0

0-1

,848

.00

-1,9

48.0

0

Posi

tion

clos

ed a

t 1,1

62.2

5-2

45.0

0Va

riatio

n m

argi

n of

-245

.00

is n

ow re

alis

ed lo

ss, a

nd is

de

bite

d fr

om T

otal

Cas

h-2

45.0

0In

itial

m

argi

n is

re

leas

ed-2

45.0

0

Clie

nt in

stru

cts

MFG

A to

co

nver

t the

USD

bal

ance

ba

ck to

AU

D. R

ate

quot

ed

is 0

.92

USD

per

AU

D

19,7

33.7

019

,733

.70

0.00

0.00

36

C230511

Example 3 – Rolling CFD - Short position which realises a profit.

Mary believes that the Australian index will weaken.

Mary sells 12 AU200CASH Rolling CFDs at 4,630 representing an exposure of AUD 12 per index point move. The position

requires an Initial Margin of 5%. This example assumes that no commission is payable. The impact on your return if

commission were payable is set out at the end of this example below.

As Mary predicted, the Australian index falls. By the end of the Local Business Day, the price has fallen to 4,578. Mary holds

her position open past Business Close, so a funding rate of 3% below the MFGA Base Rate (for the purpose of this example,

4.75%) is applied. A Dividend Adjustment (reflected in your CFD account as a cash adjustment) of AUD 1.01 is applied to her

account to reflect dividends paid on the constituents of the Australian index covered by the underlying Futures Contract.

The following day, AU200CASH falls further, so Mary decides to take profit. She closes her position at 4,531, and has made a

profit of AUD 1,189.62.

The total profit on this trade is AUD 1,189.62 (reflecting a return of 42.82% on initial outlay).

*This MFGA Base Rate is indicative only and is subject to change.

Open Short Position

Trade Sell AU200CASH

Number of CFDs 12

Contract Price 4,630

Total Value AUD 55,560 Number of CFDs x Contract Price

Initial Margin AUD 2,778 5% of Total Value

Initial Outlay AUD 2,778

Open Position Held Past Business Close

Contract Price 4,578 Settlement price at end of Local Business Day

Open Contract Value AUD 54,936 Number of CFDs x Contract Price

Funding Cost (MFG Base Rate - 3%) AUD 2.63

Open Contract Value x Interest Rate / 365 calculated each day the contract is held open using the settlement price of the Contract Security, and posted daily.

Dividend Adjustment (AUD 1.01)Cash adjustment reflecting the amount of any constituents' dividends or distributions and their weightings in the relevant index covered by the underlying Futures Contract.

Close Short Position

Trade Buy AU200CASH

Number of CFDs 12

Contract Price 4,531

Total Value AUD 54,372 Number of CFDs x Contract Price

Total Profit / Loss AUD 1,189.62 Open Contract Value per CFD – Closing Value per CFD + Funding Cost + Dividend Adjustment

Return on Outlay 42.82% Total Profit divided by Initial Outlay

If commission had been payable on this trade at 0.10%, then a commission charge of USD23.00 would have been applied to open this position, and a commission charge of USD22.69 would have been applied to close this position. The Initial Outlay would have been USD1,863.00, resulting in a Total Profit of USD264.31, and a Return on Outlay of 14.19%.

37

230511

Example 3 - Account Entries – Mary’s CFD account will have the following entries (assuming she does not enter into any other

CFD transactions):

Description Total Cash Variation Margin GLV Initial Margin Free Equity

Day 1

Deposit of AUD on opening of account

20,000.00 20,000.00

Position opened at 4,630 -2,778.00 17,222.00

Position at end of Day 1, revalued at Contract Price of 4,578

624.00 (Variation Margin payable by MFGA)

20,624.00 -2,746.80 17,877.20

Day 2

Funding cost (at 1.75%) posted on the open CFD position using the previous Business Day’s settlement price of 4,578 (credit AUD 2.63)

20,002.63 17,879.83

Dividend adjustment (debit AUD 1.01)

20,001.62 17.878.82

Position closed at 4,531 21,189.62

Variation margin of 1,188 is now realised profit, and is credited to Total Cash

Initial margin is released

21,189.62

38

C230511

Example 4 – Rolling CFD - Long position which realises a loss.

Andrew believes that the Japanese index will strengthen.

Andrew buys 100 JP225CASH Rolling CFDs at 9,450 representing an exposure of JPY 100 per index point move. The position

requires an Initial Margin of 10%. This example assumes that no commission is payable. The impact on your return if

commission were payable is set out at the end of this example below.

Unfortunately, Andrew was wrong and the Japanese index drops. By the end of the Local Business Day, the price has dropped

to 9,350. Andrew holds his position open past Business Close, so a funding rate of 3% over the MFGA Base Rate (for the

purpose of this example, 0.14%)* is applied. A Dividend Adjustment (reflected in your CFD account as a cash adjustment)

of JPY 863 is applied to his account to reflect dividends paid on the constituents of the Japanese index covered by the

underlying Futures Contract.

The following day, JP225CASH falls further, so Andrew decides to close his position. He closes his position at 9,250, and has

made a loss of JPY -19,219.

The total loss on this trade is JPY -19,219 (reflecting a return of -20.34% on initial outlay), which remains in the JPY ledger in

Andrew’s account until he instructs MFGA to transfer it back to his base currency (AUD).

*This MFGA Base Rate is indicative only and is subject to change.

Open Long Position

Trade Buy JP225CASH

Number of CFDs 100

Contract Price 9,450

Total Value JPY 945,000 Number of CFDs x Contract Price

Initial Margin JPY 94,500 10% of Total Value

Initial Outlay JPY 94,500

Open Position Held Past Business Close

Contract Price 9,350 Settlement price at end of Local Business Day

Open Contract Value JPY 935,000 Number of CFDs x Contract Price

Funding Cost (MFG Base Rate + 3%) (JPY 82)

Open Contract Value x Interest Rate / 360 calculated each day the contract is held open using the settlement price of the Contract Security, and posted daily.

Dividend Adjustment JPY 863Cash adjustment reflecting the amount of any constituents' dividends or distributions and their weightings in the relevant index covered by the underlying Futures Contract.

Close Short Position

Trade Sell JP225CASH

Number of CFDs 100

Contract Price 9,250

Total Value JPY 925,000 Number of CFDs x Contract Price

Total Profit / Loss JPY -19,219 Closing Value per CFD – Open Contract Value per CFD + Funding Cost + Dividend Adjustment

Return on Outlay -20.34% Total Profit / Loss divided by Initial Outlay

If commission had been payable on this trade at 0.10%, then a commission charge of USD23.00 would have been applied to open this position, and a commission charge of USD22.69 would have been applied to close this position. The Initial Outlay would have been USD1,863.00, resulting in a Total Profit of USD264.31, and a Return on Outlay of 14.19%.

39

230511

Exam

ple

4 - A

ccou

nt E

ntrie

s –

Andr

ew’s

CFD

acc

ount

will

hav

e th

e fo

llow

ing

entr

ies

(ass

umin

g he

doe

s no

t ent

er in

to a

ny o

ther

CFD

tran

sact

ions

):

AUD

Led

ger

JPY

Ledg

er

Des

crip

tion

Tota

l Cas

hVa

riatio

n M

argi

nG

LVIn

itial

M

argi

nFr

ee

Equi

tyTo

tal

Cash

Varia

tion

Mar

gin

GLV

Initi

al

Mar

gin

Free

Eq

uity

Day

1

Dep

osit

of A

UD

on

open

ing

of a

ccou

nt20

,000

.00

20,0

00.0

0

Posi

tion

open

ed a

t 9,4

500

0-9

4,50

0-9

4,50

0

Posi

tion

at e

nd o

f Day

1, r

eval

ued

at

Cont

ract

Pric

e of

9,3

50

-10,

000

(Var

iatio

n M

argi

n pa

yabl

e to

M

FGA)

-10,

000

-93,

500

-103

,500

Day

2

Fund

ing

cost

(at 3

.14%

) pos

ted

on th

e op

en C

FD p

ositi

on u

sing

the

prev

ious

Bu

sine

ss D

ay’s

set

tlem

ent p

rice

of

9,35

0 (d

ebit

JPY

82)

-82

-103

,582

Div

iden

d ad

just

men

t (cr

edit

JPY

863)

78

1-1

02,7

19

Posi

tion

clos

ed a

t 9,2

50-1

9,21

9

Varia

tion

mar

gin

of

-20,

000

is n

ow re

alis

ed

loss

, and

is d

ebite

d fr

om T

otal

Cas

h

-19,

219

Initi

al

mar

gin

is

rele

ased

-19,

219

Clie

nt in

stru

cts

MFG

A to

con

vert

the

JPY

bala

nce

back

to A

UD.

Rat

e qu

oted

is

81.

759

JPY

per A

UD

19,7

64.9

319

,764

.93

0.00

0.00

40

C230511

Example 5 – Additional Margin (Margin Call)

Robert believes that the HK index will rise. Robert buys 15 HKMAR10 (Hang Seng Index March 2010 Contract) Expiring CFDs at

HKD 21,300, representing an exposure of HKD 15 per index point move. The position requires an Initial Margin of 10%. This

example assumes that no commission is payable. The impact on your return if commission were payable is set out at the end

of this example below.

The HK Index trades significantly down. Robert’s Free Equity moves into negative, and he receives a call for Additional Margin

(a margin call) from MFGA’s Index and Commodity CFD desk.

Open Long Position

Trade Buy HKMAR10

Number of CFDs 15

Contract Price 21,300

Total Value HKD 319,500 Number of CFDs x Contract Price

Initial Margin HKD 31,950 10% of Contract Value

Initial Outlay HKD 31,950

Open Position Held Past Business Close

Contract Price 20,900

Total Value HKD 313,500 Number of CFDs x Contract Price

Initial Margin HKD 31,350 10% of Contract Value

Unrealised Profit/Loss

HKD -6,000

AUD Free Equity AUD 5,000 Initial account balance

HKD Free Equity HKD -37,350 Initial Margin + Unrealised Profit/Loss

AUD equivalent Free Equity

AUD -217.79AUD free equity plus HKD free equity converted to AUD at 7.1582 HKD per AUD

Close Short Position

AUD equivalent Free Equity

AUD -217.79AUD free equity plus HKD free equity converted to AUD at 7.1582 HKD per AUD

Additional Funds AUD 2,000

AUD Free Equity AUD 7,000 Initial account balance plus additional funds

HKD Free Equity HKD-37,350 Initial Margin + Unrealised Profit/Loss

AUD equivalent Free Equity

AUD 1,782.21 Positive free equity restored

If commission had been payable on this trade at 0.10%, then a commission charge of HKD 319.50 would have been applied to open this position. The Initial Outlay would have been HKD 32,269.50, so the HKD Free Equity would have been HKD-37,669.50 after the additional funds had been provided resulting in an AUD equivalent Free Equity of AUD 1,737.57

41

230511

Exam

ple

5 Ac

coun

t Ent

ries

- Rob

ert’s

CFD

acc

ount

will

hav

e th

e fo

llow

ing

entr

ies

(ass

umin

g he

doe

s no

t ent

er in

to a

ny o

ther

CFD

tran

sact

ions

):

AUD

Led

ger

HKD

ledg

er

Desc

riptio

nTo

tal C

ash

Varia

tion

Mar

gin

GLV

Initi

al

Mar

gin

Free

Eq

uity

Tota

l Ca

shVa

riatio

n M

argi

nG

LVIn

itial

M

argi

nFr

ee

Equi

ty

Day

1

Dep

osit

of A

UD

on

open

ing

of a

ccou

nt5,

000.

005,

000.

00

Posi

tion

open

ed a

t 21,

300

0.00

0.00

-31,

950

-31,

950

Acco

unt b

alan

ce in

AU

D e

quiv

alen

t (H

KD c

onve

rted

to A

UD

at

7.1

582

HKD

per

AU

D)

5,00

0.00

536.

59

Posi

tion

mar

ked

at 2

0,90

0 in

tra-

day

-6,0

00

-6,0

00-3

1,35

0-3

7,35

0

Acco

unt b

alan

ce in

AU

D e

quiv

alen

t (H

KD c

onve

rted

to A

UD

at

7.1

582

HKD

per

AU

D)

5,00

0.00

-217

.79

Mar

gin

Call

AUD

2,0

00 a

dditi

onal

fund

s pr

ovid

ed

Acco

unt b

alan

ce in

AU

D e

quiv

alen

t (H

KD c

onve

rted

to A

UD

at

7.1

582

HKD

per

AU

D)

7,00

0.00

1,78

2.21

42

C230511

Example 6 – Interest on CFD account balances

Interest is calculated separately in respect of each currency held in your CFD account, even if the aggregate Free Equity in

your CFD account is a credit balance. This example illustrates the impact of interest calculations that are applied to the

balances in the account.

AUD Ledger USD Ledger JPY Ledger

Description Amount Balance Amount Balance Amount Balance

Day 1

Deposit of AUD on opening of account

25,000.00 25,000.00

Day 2

Interest paid on AUD balance at 2.00% per annum (based on 365 days per year)+.

1.37 25,001.37

Realised loss on USD trade -4,219.00 -4,219.00

Realised profit on JPY trade 352,600 352,600

Day 3

Interest paid on AUD balance at 2.00% per annum (based on 365 days per year).

1.37 25,002.74

Interest charged on USD balance at 2.91% per annum (based on 360 days per year)++.

-0.34 -4,219.34

Interest paid on JPY balance at 0% per annum (based on 360 days per year)+++.

0 352,600

Final account balance on Day 3 25,002.74 -4,219.34 352,600

+ The calculation assumes an MFGA Base Rate of 4.75% for AUD. MFGA determines that interest on AUD credit balances

is 2.00%, being the MFGA Base Rate less a margin of 2.75%. As you have a credit balance of AUD 25,000, you receive

interest for that day at 2% which is AUD 1.37.

++ The calculation assumes an MFGA Base Rate of 0.16% for USD. MFGA determines that interest on USD debit balances

is 2.91%, being the MFGA Base Rate plus a margin of 2.75%. As you have a debit balance of USD 4,219.00, you pay

interest for that day at 2.91%, which is USD 0.34.

+++ The calculation assumes an MFGA Base Rate of 0.12% for JPY. MFGA applies a margin, but that margin can not result

in the relevant interest rate being less than zero. In this case, MFGA determines a margin of at least 0.12%, resulting

in the interest rate on JPY credit balances being zero. No interest is therefore paid on this balance.

Note that MFGA determines the margin (up to 3.5% on credit balances and up to 4% on debit balances) applied to the

relevant MFGA Base Rate for the particular currency in its discretion. See section 5.6.1 of the PDS for more information.

Interest on Free Equity is calculated daily and posted to the account monthly.

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Example 7 - Example Currency Conversions - How AUD fluctuations can affect your profit or loss

When you enter into an Index and Commodity CFD, all Initial Margin, Variation Margin, profits, losses, debits and credits in

relation to an Index and Commodity CFD are calculated, and are payable, in the Relevant Currency. Accordingly, you will be

exposed to foreign exchange rate fluctuations.

Upon closing an Index and Commodity CFD position you will be able to request that any foreign currency balance is

converted to AUD. Any conversion will be at the Exchange Rate quoted by MFGA. Until any foreign currency balance is

converted to AUD, fluctuations in the relevant Exchange Rate may affect the ultimate profit or loss made on the Index and

Commodity CFD position in AUD. The examples below provide an illustration of this.

(a) AUD/USD conversion

AUD/USD USD Profitable Trade USD Losing Trade

USD Profit/Loss $15,000.00 -$15,000.00

0.7700 AUD Equivalent $19,480.52 -$19,480.52

0.7450 AUD Equivalent $20,134.23 -$20,134.23

Difference due to currency movement $653.71 -$653.71

In this case, if AUD/USD moves from 0.7700 to 0.7450 you can see that profits will increase. Conversely, losses will increase

due to currency fluctuations.

(b) AUD/JPY conversion

AUD/JPY JPY Profitable Trade JPY Losing Trade

JPY Profit/Loss ¥1,000,000 ¥1,000,000

90.00 AUD Equivalent $11,111.11 -$11,111.11

85.00 AUD Equivalent $11,764.71 -$11.764.71

Difference due to currency movement $653.59 -$653.59

In this case, if AUD/JPY moves from 90.00 to 85.00 you can see that profits will increase. Conversely, losses will increase due

to currency fluctuations.

(c) AUD/SGD conversion

AUD/SGD SGD Profitable Trade SGD Losing Trade

SGD Profit/Loss $25,000.00 -$25,000.00

1.2095 AUD Equivalent $20,669.70 -$20,669.70

1.1750 AUD Equivalent $21,276.60 -$21,276.60

Difference due to currency movement $606.90 -$606.90

In this case, if AUD/SGD moves from 1.2095 to 1.1750 you can see that profits will increase. Conversely, losses will increase

due to currency fluctuations.

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(d) AUD/HKD conversion

AUD/HKD HKD Profitable Trade HKD Losing Trade

HKD Profit/Loss $70,000 -$70,000

7.1200 AUD Equivalent $9,831.46 -$9,831.46

6.8500 $10,218.98 -$10,218.98

Difference due to currency movement $387.52 -$387.52

In this case, if AUD/HKD moves from 7.1200 to 6.8500 you can see that profits will increase. Conversely, losses will increase

due to currency fluctuations.

* Note: MFGA is NOT responsible for conversions. It is your responsibility to manage conversions. At your instruction, MFGA

will convert a balance in your CFD account to AUD.

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9. GlossaryAdditional Marginhasthemeaninggiventoitinsection2.5.3;

AUD means the lawful currency of the Commonwealth of

Australia;

Business Close means the time at which the financial market

oftheRelevantExchangeclosesonaLocalBusinessDay;

CFDmeansacontractfordifference;

CFD Account means an account established in your name by

MFGA for the purpose of trading CFDs (including Index and

CommodityCFDs);

CFD Client Agreement means the contract between you and

MFGA which governs each CFD transaction (including each

IndexandCommodityCFDtransaction);

Closing Price means the Contract Price of an Index and

Commodity CFD at the time it is closed out, as determined by

MFGA;

Closing Value means the Closing Price multiplied by the

ContractQuantity;

Contract Price means, in respect of an Index and Commodity

CFD, the price of the Index and Commodity CFD at any time

(which reflects the price of the underlying Futures Contract

after application of the MFGA Spread) and, in the case of a

RollingCFD,aFairValuecomponent);

Contract Quantity means one Index and Commodity CFD

(unless that number is adjusted by MFGA in accordance with

theCFDClientAgreement);

Contract Value means the Contract Price multiplied by the

ContractQuantity;

Corporations ActmeanstheCorporationsAct2001(Cth);

Dividend Adjustment means an amount paid to or

deducted from your CFD Account in respect of a dividend,

distribution or other corporate action paid by a constituent

of the index covered by the relevant Futures Contract and

taking into account that constituent’s weighting in the

relevant index, as described in section 5.4 of this PDS.

Exchange Rate in relation to any currency, means any widely

recognized and published foreign exchange rate selected by

MFGA, to which MFGA may apply a spread (in addition to any

existingbuy/sellspread)initssolediscretion;

Expiring CFD means an Expiring CFD as described in this PDS.

Fair Value means, for a Rolling CFD, an amount affecting

the price MFGA quotes to you to buy or sell a Rolling CFD to

reflect announced and anticipated dividends, distributions

and corporate actions and the implicit funding cost that is

included in the price of the underlying Futures Contract as

described in section 5.3 of this PDS.

Foreign Currency Ledger means a ledger operated for a

foreigncurrencywithinaCFDAccount;

Free Equityhasthemeaninggiventoitinsection2.5.3;

Futures Contract means, in respect of an Index and

Commodity CFD, the underlying instrument for that Index

and Commodity CFD, which will be a futures contract over a

marketindexorcommodity;

Gross Liquidation Value and GLV have the meaning given to

suchtermsinsection2.5.3;

Hedge Counterparty has the meaning given to such term in

section7.4;

Hedge Position means any hedging arrangement entered into

by MFGA with a Hedge Counterparty in order to hedge MFGA’s

exposuretoaclientunderanIndexandCommodityCFD;

HKDmeansthelawfulcurrencyofHongKong,SAR;

Index and Commodity CFD means a CFD offered by MFGA

under this PDS where the underlying instrument is a Futures

Contract;

Initial Marginhasthemeaninggiventoitinsection2.5.1;

Last Dealing Time means, in respect of an Expiring CFD, the

last time at which you may execute an opening or closing

trade in that Index and Commodity CFD as determined by

MFGAandassetoutattheMFGAwebsite;

Local Business Day means, in relation to an Index and

Commodity CFD, a day on which the Relevant Exchange for

thatIndexandCommodityCFDisopenforbusiness;

Lot Size means the minimum incremental number of Index

and Commodity CFDs that may be traded, as set out on the

MFGAwebsite;

Margin means Additional Margin, Initial Margin or Variation

Margin;

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MFGAmeansMFGlobalAustraliaLimited;

MFGA Base Rate means, in respect of a Relevant Currency, a

rate determined by MFGA as the applicable interest rate for

that Relevant Currency in its sole discretion having regard

to the current money market rate in the jurisdiction of such

currency and the rate notified to MFGA by its counterparty on

anyHedgePosition,ifapplicable;

MFGA Expiry Date means, for an Expiring CFD, the expiry

date noted on the MFGA website (which may differ from the

expirydateoftheunderlyingFuturesContract);

MFGA Spreadhasthemeaninggiventoitinsection5.1;

Minimum Deposit Amount means the minimum amount,

notified to you by MFGA, required to activate your CFD

Account;

Open Contract Value means the Contract Value of an Index

and Commodity CFD at the time the Index and Commodity

CFDisopened;

RBA Ratehasthemeaninggiventosuchterminsection5.6;

Relevant Currency means, in respect of an Index and

Commodity CFD, the currency in which the Open Contract

Value of the Index and Commodity CFD, all debits and credits

in respect of the Index and Commodity CFD and the Contract

Value and Closing Value of an Index and Commodity CFD are

calculated,assetoutontheMFGAwebsite;

Relevant Exchange means, in relation to a Futures Contract,

the financial market on which the Futures Contract is quoted

assetoutattheMFGAwebsite;

Rolling CFD means a Rolling CFD as described in this PDS.

SGDmeansthelawfulcurrencyofSingapore;

Sydney Business Day means a day (other than a Saturday

or Sunday or public holiday) on which banks and foreign

exchangemarketsareorwillbeopenforbusinessinSydney;

USDmeansthelawfulcurrencyoftheUnitedStates;

Variation Margin has the meaning given to it in section 2.5.2.

MF Global Australia Limited

PO Box N699 Grosvenor Place NSW 1220 Australia

CFDs Tel (02) 8273 8933 Fax (02) 9247 3765

Forex Tel (02) 8273 8888 Fax (02) 9247 3765

Futures Tel (02) 8273 8822 Fax (02) 9247 3765

www.mfglobal.com.au

ABN 50 001 662 077

AFSL 230563

MF Global Australia Limited is a subsidiary of MF Global Holdings Ltd