DDO REQUIREMENT

APPLICATION TO MARGIN TRADING

Class of retail clients that comprise the target market for this product – s 994B(5)(b)

1. Description of the likely objectives, financial situation and needs of consumers in the target market

Background

Tiger Brokers (AU) Pty Limited (“TBAU”) is an online broker that provides financial product trading services to retail and wholesale clients. We are authorized and regulated by the Australian Securities and Investments Commission (ASIC), with license number 300767 and business office located at Suite 28.01, 25 Bligh Street Sydney, NSW 2000.

The design and distribution obligation, “DDO”, aims to assist clients to obtain appropriate financial products by requiring product issuers and distributors to have a consumer- centric approach to the design and distribution of financial products. 

Target Market

 Likely financial situations

• The Clients seek to borrow money in the form of margin loan to invest in marginable financial products, such as eligible shares and ETFs, using existing portfolio as the collateral.

• The assets deposited in the margin account to act as collateral for the margin loan are not borrowed or sourced from double gearing, such as using cash advanced from a credit card or personal loan. They are totally unencumbered by any mortgage, lien or other interest.

• TBAU does not accept a guarantor arrangement as valid security or collateral for any debit balance on your Account.

• Clients are required to meet the financial capacity criteria set out below, corresponding to the requested loan limit

Annual Income Before Tax + Current Liquid Asset Value ————Margin Limit

< 50,000 AUD …………………………………………………………………………………..No loan approved

50,000 – 90,000 AUD ………………………………………………………………………..10,000 AUD

90,000 – 150,000 AUD…………………………………………………………30,000 AUD

150,000 – 240,000 AUD……………………………………………………….50,000 AUD

> 240,000 AUD……………………………………………………………………………………80,000 AUD

Likely needs and objectives

• Seek to increase the size of trading and holdings

• Potentially improve your portfolio diversification.

• Aim for higher return while accepting corresponding higher risk which can be substantial

Risk tolerance level

• Margin trading involves high risks, with certain trades or strategies potentially resulting in significant losses that may exceed the margin requirement or the balance initially deposited. These risk profiles are consistent with their risk tolerance and financial capacity, and they are able to bear any potential losses arising from trading in line with my financial situation.

• The margin loan provided to retail clients within the meaning of section 761G of the Corporations Act is non-recourse in nature, meaning the liability of the client to TBAU is limited to the rights related to the secured property/collateral. Therefore, you, being a retail client, may not be liable for any account deficit or negative balance resulting from losses connected to your purchase of securities using TBAU's margin lending facility. However, certain financial services, including margin lending, may be suspended until any account deficit is repaid. Also, even if the deficit is eventually cleared, TBAU reserves the right to reassess your eligibility for margin lending and other financial services

Liquidity needs

• Margin lending provides flexible access to liquidity by borrowing against existing portfolios without liquidating any investments, enabling timely funding for new trades or exposure adjustments.

• Portfolios used as collateral for margin loans cannot be transferred out without TBAU’s prior consent and it is subject to satisfaction of applicable margin requirements. Sales proceeds and available cash balances in the margin account are generally used to repay the outstanding margin loan before you can request withdrawal. Accordingly, clients may not be able to rely on the liquid assets in the margin account to meet other liquidity needs.     

• Clients must possess the necessary financial resources, including liquid assets and regular income, manage and meet the financial and margin obligations that may arise from the trades, including, but not limited to, margin requirements, margin calls, and losses due to margin deficits, without experiencing financial hardship, material financial difficulty, reliance on government assistance (such as pensions or job-seeker benefits), or double gearing (such as cash advanced from a credit card or personal loans).

Investment timeframe

• There is no prescribed investment timeframe for investors in the target market. The investment timeframe will vary vastly among investors, which may depend upon, among other factors, their purposes of trading and investment.

• Clients shall be aware that the interest on margin loan accrues daily and it will compound over time. Interest is generally posted monthly to your account, increasing your outstanding loan balance.

Other requirements

• Clients declare they have read the Standard Margin Lending Facility PDS and T&Cs and understood the nature, benefits, risk, limitations and obligations in associated with margin lending.

• Clients must have the capacity to actively monitor their positions, manage margin requirements, and take timely action to meet obligations and mitigate losses.

• Clients shall meet the general account opening and Know Your Client requirements.

• For any fund or trust, the trustee must ensure that the margin trading is in line with the trust deed, risk statement and investment strategy.

Unsuitability

The margin facility is suitable when:

• Clients whose financial situations, needs and objectives, risk tolerance level, and liquidity needs do not align with those set out above;

• Clients who cannot bear the consequence of potential losses without material impact on their standard of living;

• Clients who are unable to monitor their positions and margin obligations and take actions as required;

• Clients who have low levels of financial literacy and technological literacy;

• Clients who are unable to meet the margin account eligibility requirements.

• Where the client invests through a trust or fund, margin trading is not in line with the trust deed, risk statement and/or investment strategy.

• Clients intend to invest through Self- Managed Superannuation Fund account holders ("SMSF").

2. Description of margin trading (including its key attributes)

Margin lending allows you to borrow money in the form of margin loan to invest in marginable products, such as eligible shares and ETFs, using your existing eligible portfolio as security. This helps you to increase the size of trading and holdings and potentially improve your portfolio diversification. Margin lending increases the potential for higher returns, but also increases the potential for greater losses.

Margin lending allows clients to borrow funds secured against existing investments to purchase additional securities. This amplifies clients’ trading capacity, diversification opportunities and potential for higher return while undertaking greater risks.

 Key attributes

 Margin limit

The determination of approved margin loan limit considers client’s financial capacity and source of funding among other factors, and the final approved limit may be equal to or less than the amount requested. Before applying, you may wish to speak to an adviser to see if margin lending is suitable for you.  Retail clients are limited to the maximum margin loan limit of 80,000 AUD.

Margin requirement

Margin trading is subject to Initial Margin (IM) and Maintenance Margin (MM) requirements. TBAU may modify its margin requirements at any time in TBAU's sole discretion without prior notice.

Margin obligations are assessed on a holistic portfolio basis, meaning that TBAU calculates margin requirements across the entirety of a client’s account portfolio taking into account all positions, assets, and liabilities, rather than assessing margin obligations on an individual product basis. In other words, the IM and MM requirements applicable to your portfolio are calculated as the sum of the IM and MM requirements of each position held in the account.

Margin call

Margin Call occurs when your account value is approaching to the MM requirement. Margin call is not issued or communicated by a phone call or any other direct contact. Instead, you will be notified through electronic alerts sent via email and/or through the Tiger Trade platform, warning that your margin account is nearing the margin requirement. Should you receive a margin call, you may consider to transfer in additional funds or securities or sell some or all your investment(s) to reduce your loan balance at short notice. Failure to do so may result in the forced liquidation of positions.

Forced liquidation

TBAU will generally close positions automatically upon a margin deficit arising. TBAU is not obliged to give clients an opportunity to transfer in additional funds or securities before initiating liquidation and will liquidate positions, in an order at its discretion, to bring your account back into margin compliance. Clients are not entitled to choose the order in which assets are liquidated.

3. Explanation of why margin trading, including its key attributes, is likely to be consistent with the likely objectives, financial situation and needs of consumers in the target market

Needs and objectives
Clients in the target market are seeking to amplify investment returns, diversify their portfolio, or access liquidity without selling existing holdings. Margin lending allows clients to borrow against their investments to increase market exposure, implement new strategies, or manage cash flow while retaining ownership of their portfolio. These objectives are consistent with the features of the margin lending facility, including leverage and the ability to fund additional securities purchases.

Financial situation
Clients in the target market must have the sufficient financial capacity to tolerate the risks of borrowing to invest, including the potential for losses greater than their initial investment. They must not rely on double gearing to fund the trades, considering the multiplication of the risk exposure and potential liquidity pressure. Clients are mandated to provide information regarding their financial capacity, which will be verified by further requiring clients to supplement proofs. This will be used to assess if they are likely to be within the target market corresponding to the requested loan limit: they must have sufficient income, savings, or other liquid assets to meet the margin requirements and finance obligations, which includes but not limited to interest costs, margin calls, and any margin shortfall obligations that may arise.  

Liquidity needs
Margin lending facilities meet the needs of clients who require liquidity without having to liquidate existing portfolios or make additional deposits. By leveraging their current holdings, clients gain greater flexibility to increase trading capacity, seize new investment opportunities, or optimise their portfolio exposures.

Conditions and restrictions relating to the distribution of this product – s 994B(5)(c)

4. Outline of the conditions and restrictions relating to distribution of margin trading

The products are distributed by TBAU and various third parties who may be involved in the distribution of the products, including various introducing brokers (each a Distributor, and together, the Distributors).

TBAU as the distributor

Any distribution made by TBAU directly to clients will need to ensure that margin facilities are only issued to clients who are reasonably and likely to be within the target market.  The following controls are in place:

• TBAU’s website provides clients with easy access to FAQs, PDS, TMD and T&Cs, which helps clients to assess if the product is consistent with their objectives, needs and financial situations.

• Marketing materials related to margin facilities are typically limited to factual information, aimed at informing recipients regarding the offering availability and functionalities, rather than actively recommending it. The disclaimer will emphasize that margin trading carries a high level of risk and may not be suitable for all investors.

• Margin trading requires an additional activation step, which, among other things, expressly calls clients’ attention to the following prior to their trading application:

1.        A requirement to read and understand TMD, PDS and T&Cs.

2.        Significant high risk in nature

3.        Financial capacity assessment and verification

4.        Their obligations

• Representatives are reminded not to offer or solicit clients to margin facilities and correspondence between TBAU and clients shall be limited to factual information and technical support and no advice is provided.  Staff are provided with ongoing training and are subject to regular compliance review.

3rd party distributor:

TBAU takes due skill and care in choosing suitable distributors. 3rd party distributor must be a regulated person under Corporation Act S994A(1).  All distributors must complete the compliance and due diligence questionnaire during the onboarding process, which will be used, among other information, to assess their eligibility to become TBAU’s distributors.

Distributors must enter into an agreement with TBAU, which, among other things, contractually governs the distribution of financial products. 

All marketing and promotional materials related to the margin trading must be submitted to TBAU for review and approval prior to the release.

TBAU will seek regular data from 3rd party distributors to ensure that the distributors are complying with the requirement to distribute TBAU’s margin trading only to persons within the target market. TBAU requires distributors to report:

• The complaints and feedback received about the product within 10 business days after the end of each quarter

• Significant dealings: as soon as practicable and in any event within 10 business days after becoming aware

5. Explanation of why these distribution conditions and restrictions will make it more likely that the consumers who acquire the margin trading are in the target market

TBAU as the distributor 

1.    The Website provides clients with multiple ways to easily access the required information to assess if the product is consistent with their personal objectives, needs and financial situations.

2.    Given that marketing materials related to margin trading are generally factual information only, limited to informing recipients of the availability and functionalities, they are less likely to be perceived as a solicitation, invitation, or recommendation to trade on margin, particularly by recipients who are less likely to fall within the target market. The inclusion of disclaimers highlighting the high-risk nature and that they may not be suitable for all investors further serves as a reminder that these products are intended only for a limited and specific target market.

3.    Setting up a separate trading permission process for margin facility is consistent with the fact that not all clients will be within the target market.

4.    Clients are required to disclose information about their financial capacity, which will be verified through the submission of supporting documentation. The information will be used, among other things, to assess if they are likely to be within the target market of the requested loan limit.

5.    Representatives are prohibited from offering or soliciting clients to trade margin trading, and all client communications are limited to factual information and technical support. This helps reduce the likelihood of clients who are less likely within the target market being encouraged to trade margin trading. The training and compliance review will help representatives improve their understanding towards the product, which is another reasonable step taken to improve the distribution of margin trading within the target market.

3rd party distributor:

 TBAU’s compliance due diligence check during the selection process is helpful for TBAU to assess if the distributor has a sound and solid compliance framework. TBAU has placed contractual obligations on third party distributors that they must have established, implemented and maintained appropriate procedures, processes and controls with a view to ensuring that margin trading is distributed in accordance with this TMD.  TBAU has a high degree of control over the distribution in that TBAU applies the same stringent marketing review criteria on distributor’s promotional material and all clients will be subject to the same margin facility application process as direct clients.

Reviews

6. Outline of the events and circumstances that would reasonably indicate to TBAU that the TMD for margin trading is no longer appropriate (i.e. "review triggers" – s 994B(5)(d)

Review Triggers when:

• There are significant dealings in issuing margin trading, which are not consistent with the target market or this TMD. This trigger occurs where significant distribution is occurring outside the target market, and does not refer to any one particular dealing in margin trading

• A distributor has reported a large volume of complaints related to margin trading

• TBAU has received a large volume of complaints in relation to margin trading, indicating that the nature and risks of margin trading are not well understood

• Significant compensation paid out in relation to margin trading

• TBAU has made known of a material number of clients who suffered financial hardship due to margin trading

• TBAU has detected significant issues with the distribution of margin trading through monitoring of our day-to-day activities, or the monitoring and supervision of our Distributors

• Material changes to key attributes or investment objectives

• Key attributes have not performed as disclosed by a material degree and for a material period

• ASIC's use of its Product Intervention Powers in respect of the product or other regulator orders or directions that affect the products

7. The period of time between the start of the day this TMD is made and the day that the first periodic review of the TMD will conclude – s 994B(5)(e)

The first periodic review of this TMD will occur in December 2026.

8. The period of time between the conclusion of a periodic review of the TMD and the start of the next periodic review – s 994B(5)(f)

TBAU will review the appropriateness of its target market on an annual basis

Reporting period for reporting information about the number of complaints about the product – s 994B(5)(g)

9. The reporting period in which the distributors of TBAU's financial products are required to provide information about the number of complaints received about the product

TBAU will require that Distributors report information about the number and nature of complaints received about the product and whether any persons not in the target market were distributed TBAU issued ETOs, within 10 business days after the end of each quarter.

Information Sharing

10. Outline of the kinds of information that TBAU will require from distributors to promptly identify that the TMD for ETOs is no longer appropriate – s 994B(5)(h)

Complaint: the number, nature, resolution and compensation of complaints about ETOs

Feedback: client feedback about ETOs and/or the target market

Significant dealings:

• details and reasons why they are considered as the significant dealings;

• how they are identified

• steps taken or to be taken to persons affected

• steps taken or to be taken to stop it happening again

11. The distributors that will be required to provide the information specified above – s 994B(5)(h)(i)

TBAU will require all of the above data from all Distributors. No party may engage in the distribution of TBAU’s ETOs unless they have entered into a service level agreement with us.

12. The reporting period for the relevant distributors to provide the information specified above – s 994B(5)(h)(ii)

Complaint: Quarterly

Feedback: Quarterly

Significant dealing: as soon as practicable and in any event within 10 business days after becoming aware.