Product Disclosure Statement - OTC Crypto Derivatives

3. KEY INFORMATION: QUESTIONS AND ANSWERS

3.1 What financial products does OKX provide under this PDS?

OKX issues over-the-counter derivative products to retail clients in Australia through the Trading Platform. As at the date of this PDS, the Products covered by this PDS are limited to USDT-margined perpetual futures contracts referencing crypto-assets.

These Products are leveraged OTC derivatives. They are entered into directly between you and OKX as principal counterparty and are not exchange-traded products. When you trade a Product, you do not acquire any ownership rights or other interest in the underlying crypto-asset.The Products allow you to take a position on whether the price of the relevant underlying crypto-asset will rise or fall. A position may therefore be opened on a long basis or a short basis.

3.2 What is an over-the-counter derivative?

An over-the-counter or OTC derivative is a financial product that is entered into directly between you and the issuer, rather than being traded on a licensed exchange or other regulated market.

In the case of the Products described in this PDS, your contract is with OKX. You are therefore exposed to OKX as your counterparty. It is not possible to transfer a Product to another issuer, broker or market participant or to close the Product by dealing with another provider. If you wish to close a position, you must do so through the Trading Platform and in accordance with the terms on which OKX makes the Product available.

Because the Products are OTC derivatives, they do not carry the protections that may apply to exchange-traded products. For example, the Products are not cleared through a licensed clearing and settlement facility and are not protected by any exchange guarantee or compensation fund.

3.3 What is a perpetual futures contract?

A perpetual futures contract is a derivative contract that gives you exposure to the price movements of an underlying asset without requiring you to buy or sell the underlying asset itself.

The perpetual futures contracts described in this PDS reference the value of particular crypto-assets. Their value moves according to changes in the price of the relevant underlying crypto-asset.

Unlike traditional futures contracts, perpetual futures contracts do not have a fixed settlement date or expiry date. Instead, they remain open until they are closed by you, liquidated in accordance with the applicable margin rules, or otherwise closed in accordance with the Client Agreement.

Although these Products are described as "futures" in accordance with digital asset market convention, they are not exchange-traded futures contracts and are not capable of being traded or settled on a regulated futures market.

3.4 What Products are currently available?

As at the date of this PDS, the Products available under this PDS are limited to USDT-margined perpetual futures contracts referencing crypto-assets listed by us from time to time on the Trading Platform.

Each Product references a specified underlying crypto-asset, such as BTC or ETH, or another crypto-asset made available by us from time to time.

We may add, suspend, restrict or remove particular Products at any time in accordance with the Client Agreement and applicable law. If you hold an open position in a Product that is suspended, restricted or removed, we may require you to close that position or we may close it in accordance with the Client Agreement.

3.5 What does "USDT-margined" mean?

"USDT-margined" means that the Products are margined and settled in USDT.This means that:

• the margin you must maintain is calculated by reference to your USDT balance and unrealised profit or loss;

• profits and losses are recorded in USDT; and

• funding payments are paid or received in USDT.

You do not need to hold the underlying crypto-asset in order to trade a Product referencing that crypto-asset. For example, you may trade a BTC-referencing perpetual futures contract without holding BTC, provided that you have sufficient USDT available in your trading account to satisfy the applicable margin requirements.

3.6 What assets may be used as collateral?

Only USDT is accepted as collateral for the Products described in this PDS.

This is an important feature of the Products.

Other digital assets that may be supported elsewhere on the platform, including BTC, ETH, USDC, USDG and other crypto-assets, are not accepted as collateral for the Products, even if they are held by you in the same trading account. Those assets are not recognised for the purpose of calculating account equity, margin sufficiency, liquidation thresholds or negative balance protection for the Products.

Accordingly, for the Products covered by this PDS, the relevant collateral pool is limited to USDT only.

3.7 How does leverage work?

Leverage allows you to gain exposure to a position whose notional value is greater than the amount of collateral you contribute.

This means that a relatively small movement in the value of the underlying crypto-asset may result in a proportionately larger gain or loss on your position.

For retail clients, the maximum leverage ratio available for the Products is 2:1. The Initial Margin required to open a position is calculated as the notional value divided by the leverage ratio selected. At the maximum leverage of 2:1, the Initial Margin is 50% of the notional value. At lower leverage (for example, 1:1), the Initial Margin is higher.

Example:

If you wish to open a long position in a BTC-referencing Product with a notional value of 10,000 USDT, you will be required to have at least 5,000 USDT available to satisfy the Initial Margin requirement. If the value of the position rises by 10%, you may realise a gain of approximately 1,000 USDT, ignoring fees, funding and any other charges. If the value of the position falls by 10%, you may incur a loss of approximately 1,000 USDT, ignoring fees, funding and any other charges.

Leverage magnifies losses as well as gains. You should not trade the Products unless you understand that losses can arise rapidly.

3.8 What is Initial Margin?

Initial Margin is the minimum amount of collateral you must have available in order to open a new position.

For retail clients trading the Products described in this PDS, the Initial Margin is calculated as the notional value of the position divided by the leverage ratio selected. The minimum Initial Margin is 50% of the notional value, which applies when the maximum leverage of 2:1 is used.

A position cannot be opened unless sufficient USDT is available in your trading account to satisfy the applicable Initial Margin requirement.

Further details regarding Initial Margin are set out in section 6 (Margins) of this PDS.

3.9 What is account equity?

For the Products described in this PDS, account equity is determined by reference to the amount of USDT in your trading account together with the unrealised profit and loss on your open positions in the Products.

For cross-margin positions, the effective account equity used for margin and liquidation purposes may be reduced by amounts committed to pending open orders (including order fees) and USDT allocated to isolated margin positions. This means that account equity available for cross-margin purposes may be less than the total USDT balance shown in your trading account.

Other crypto-assets held in your trading account are not counted as collateral or equity for the purpose of the Products.

This means that a client may hold various digital assets in the same trading account, but only the USDT balance, together with unrealised profit and loss on the relevant positions, is taken into account for margin and liquidation purposes in relation to the Products.

3.10 What is Maintenance Margin?

Maintenance Margin is the minimum amount of account equity that must be maintained in order to keep positions open.

If your account equity falls below the applicable threshold, your positions may be subject to automatic liquidation in accordance with our systems and the Client Agreement.

Maintenance Margin is distinct from Initial Margin. Initial Margin determines whether you may open a position. Maintenance Margin is relevant to whether you may continue to hold that position.

Further details regarding Maintenance Margin are set out in section 6 (Margins) of this PDS.

3.11 What is margin close-out protection?

For retail clients, OKX applies a margin close-out protection mechanism under which positions may be automatically closed if account equity falls to 25% of the notional value of open positions at the time they were opened.

This is intended to reduce the risk that losses will continue to accumulate beyond the available collateral. However, it does not guarantee that your positions will be closed at a price favourable to you or that you will avoid losing all of your USDT collateral.

Liquidation may occur in fast-moving or illiquid markets and may crystallise losses quickly.

3.12 Does negative balance protection apply?

Yes. Retail clients are provided with negative balance protection.

This means that losses on the Products are limited to the USDT balance available for derivatives trading in the trading account. You will not be required to pay additional amounts beyond that balance in respect of losses on the Products.

Negative balance protection is an important retail client protection. However, it does not prevent you from losing all of the USDT collateral made available for derivatives trading.

3.13 How are profits and losses calculated?

Profits and losses on the Products are calculated by reference to movements in the value of the relevant Product between the time the position is opened and the time it is closed.

Profits and losses are calculated and settled in USDT.

Because the Products are leveraged, a change in the value of the underlying crypto-asset may produce a proportionately larger profit or loss relative to the amount of collateral posted.

Your account balance may also be affected by fees, funding payments and any other amounts payable in connection with the Products.

3.14 What are funding payments?

Perpetual futures contracts do not have a fixed expiry date. To help keep the value of a perpetual futures contract aligned with the relevant reference market, funding payments may apply between long and short positions.

For the Products described in this PDS, funding is applied at intervals disclosed on the Trading Platform, which may range from every 1 hour to every 8 hours depending on the Product.

Depending on market conditions and whether you hold a long or short position, you may be required to pay funding or you may receive funding. Funding payments may materially affect the profitability of a position, particularly where a position is held for an extended period.

Further details regarding pricing and funding are set out in section 5 (How to Trade) of this PDS.

3.15 What types of orders are available?

The Trading Platform may permit a range of order types, including market orders, limit orders and stop orders.

The order types made available may change from time to time. Details of the order types available at any given time will be displayed on the Trading Platform.

You should be aware that stop orders and limit orders are not guaranteed to be executed at the price specified by you. In volatile or illiquid markets, your order may be executed at a different price or may not be executed at all.

3.16 How do I open and close a position?

A position is opened by entering into a buy order or sell order for a Product through the Trading Platform.

If you buy a Product, you are generally described as taking a long position. If you sell a Product, you are generally described as taking a short position.

A position may be closed through the Trading Platform or it may be closed automatically by our systems in accordance with the Client Agreement, including where liquidation occurs. The method of closing depends on the position mode. In One-way mode, entering an opposite transaction closes or reduces the existing position. In Hedge mode, long and short positions are independent and must be closed separately by selecting the specific position to close.

3.17 Can I always close a position when I want to?

Not necessarily.

In normal market conditions, the Trading Platform is intended to allow you to close open positions. However, there may be circumstances in which your ability to open, close or manage positions is affected by market disruption, system outages, illiquidity, pricing interruptions, risk controls, regulatory restrictions or other events described in this PDS and the Client Agreement.

In such circumstances, orders may be delayed, rejected, re-priced, partially executed or not executed at all.

3.18 What are the significant risks of the Products?

The Products are speculative, leveraged OTC derivatives and involve significant risks. Those risks include the risk of losing all collateral, market risk, leverage risk, funding risk, execution risk, counterparty risk, stablecoin risk, operational risk and the risk of market disruption.

A fuller description of the significant risks associated with the Products is set out in section 4.3 (Significant risks of the Products) of this PDS.

3.19 What fees and charges apply?

You may be required to pay fees, funding payments and other charges in connection with the Products. These may include trading fees, liquidation-related charges and other fees notified to you from time to time.

Details of the applicable fees and charges are set out in section 9 (Fees, Costs and Charges) of this PDS and on the relevant fee schedule made available by us.

3.20 What are the tax implications?

The taxation treatment of the Products depends on your personal circumstances. Gains may be assessable and losses may be deductible, depending on the circumstances in which you trade.

The taxation consequences of trading derivatives referencing crypto-assets may be complex. You should obtain independent taxation advice before trading the Products.

General taxation information is set out in section 10 (Taxation Implications) of this PDS.

3.21 What if I need more information?

If you require further information about the Products or the matters described in this PDS, you should contact us using the contact details set out in section 1 (Important Information).

4. KEY INFORMATION ABOUT OUR PRODUCTS

4.1 Key features of the Products

The Products offered by OKX under this PDS are leveraged over-the-counter derivative products. As at the date of this PDS, they are limited to USDT-margined perpetual futures contracts referencing crypto-assets.

The key features of the Products include the following:

• The Products are OTC derivatives. This means that each Product is a bilateral contract between you and OKX as principal counterparty. The Products are not exchange-traded products and are not cleared through a licensed clearing and settlement facility.

• The Products provide indirect exposure to the price movements of underlying crypto-assets. When you trade a Product, you do not acquire any legal or beneficial ownership of the underlying crypto-asset and you do not obtain any right to delivery of it.

• The Products are leveraged. Retail clients may trade with a maximum leverage ratio of 2:1. Leverage can magnify gains, but it can also magnify losses.

• The Products are USDT-margined and USDT-settled. Only USDT is accepted as collateral for the Products. Profits, losses and funding payments are also recorded and settled in USDT.

• The Products are perpetual in nature. Unlike traditional futures contracts, they do not have a fixed expiry date. A position remains open until it is closed by you, liquidated in accordance with the applicable margin rules, or otherwise closed in accordance with the Client Agreement.

• The Products are subject to margin requirements, automatic risk controls and liquidation mechanisms. Positions may be automatically closed if account equity falls below the applicable threshold.

• Retail clients are provided with negative balance protection. This is intended to ensure that losses on the Products do not exceed the USDT balance available for derivatives trading in the trading account.

• The Products may also be subject to funding payments. The applicable funding interval and funding mechanics for a particular Product are disclosed on the Trading Platform and may differ between Products.

4.2 Key benefits of the Products

The Products are designed for clients who wish to obtain short-term or medium-term exposure to movements in crypto-asset prices without purchasing or holding the underlying crypto-assets themselves.

One potential benefit of the Products is that they enable a client to take either a long or short position. This means that a client may seek to benefit from either rising or falling market prices.

A further feature of the Products is that they provide a degree of capital efficiency because the client is not required to fund the full notional value of the position at the outset. Instead, the client is required to provide only the applicable margin. While this may allow a client to deploy capital more efficiently, it also increases risk because leverage magnifies losses as well as gains.

The Products may also be used for hedging purposes by clients who have exposure to movements in crypto-asset prices through other holdings or arrangements. For example, a client with long exposure to a particular crypto-asset may use a short position in a Product referencing that crypto-asset to seek to reduce the effect of adverse price movements. However, there is no assurance that any hedging strategy will always be effective.The Products also enable clients to gain exposure to crypto-asset price movements without needing to hold the underlying crypto-asset as collateral. Under the model described in this PDS, only USDT is recognised as collateral. This may reduce some of the complexity and additional volatility that can arise where multiple crypto-assets are accepted as collateral.

These features may be beneficial to some clients. However, they should not be viewed in isolation. The Products are speculative, complex and high risk. Any potential benefits must be considered together with the significant risks described below.

4.3 Significant risks of the Products

Trading in the Products involves a high degree of risk. The Products are complex, speculative and leveraged. They are not suitable for all investors. You should not trade the Products unless you fully understand their features and are willing and financially able to bear the risks involved.

The significant risks of the Products include, but are not limited to, the following.

Derivative risk

The Products are derivative contracts whose value depends on the price of an underlying crypto-asset. Derivatives can be more complex and riskier than direct investments because they introduce additional features such as leverage, margin, close-out rules, funding payments, pricing methodologies and counterparty exposure.

Unlike an investment in an underlying asset itself, the value and operation of a derivative may be affected not only by movements in the underlying market, but also by the terms of the contract, the issuer's pricing practices, the operation of risk controls and the client's ability to maintain sufficient collateral.

Leverage risk

The Products are leveraged. Leverage magnifies your economic exposure to price movements in the underlying crypto-asset. This means that relatively small movements in the price of the underlying crypto-asset may produce proportionately larger gains or losses on your position. A market movement against your position may therefore result in a rapid reduction in account equity and may cause liquidation.

The effect of leverage is that losses may arise more quickly than would be the case if you held the underlying asset directly without leverage. Even with the retail leverage cap of 2:1, losses can be significant and may result in you losing all of the USDT made available by you as collateral for derivatives trading. This can occur over a short period of time in volatile market conditions.

Risk of losing all collateral

You may lose all of the USDT used as collateral for the Products.

The margin close-out protections described in this PDS are intended to reduce the risk of losses exceeding available collateral, but they do not ensure that your positions will be closed at prices favourable to you, nor do they preserve any minimum amount of collateral. In a fast-moving or illiquid market, your positions may be liquidated quickly and you may lose the entire amount of USDT available for derivatives trading.

Margin risk

You must maintain sufficient account equity to satisfy the applicable margin requirements for your open positions.

Only your USDT balance together with unrealised profit and loss on your open positions is recognised for margin purposes in relation to the Products. Other crypto-assets held by you in the same trading account are not treated as collateral for the Products and will not be taken into account in determining whether margin requirements are satisfied.

In addition, USDT that is committed to pending open orders, allocated to isolated margin positions, or reserved for order fees is not available as effective equity for cross-margin purposes. You should monitor the available equity displayed on the Trading Platform, which reflects these deductions, rather than relying on the total USDT balance alone.

If account equity falls below the applicable threshold, positions may be automatically liquidated in accordance with our systems and the Client Agreement. You are responsible for monitoring your positions and collateral sufficiency at all times.

There may be circumstances in which you are unable to transfer additional USDT or otherwise manage your positions before liquidation occurs, including because of market volatility, operational delays, blockchain congestion, platform unavailability or other events.

Liquidation risk

Positions may be liquidated automatically if margin thresholds are breached.

For retail clients, some or all positions may be automatically closed if account equity falls to 25% of the notional value of open positions at the time they were opened. This process may operate rapidly and without prior manual intervention.

Liquidation may occur in volatile or illiquid market conditions. In those circumstances, the price at which your position is liquidated may be materially worse than the price at which the liquidation threshold was triggered. This may accelerate losses and result in you losing all available collateral.

You should not assume that any warning, notification or courtesy message will be received in time for you to avoid liquidation, or that you will always be able to close a position before a liquidation event occurs.

Negative balance protection does not prevent total loss

Retail clients are provided with negative balance protection. This means that, as between you and OKX, losses on the Products are limited to the USDT balance available for derivatives trading in the trading account.

However, negative balance protection does not prevent you from losing the whole of that USDT balance. It should not be understood as protecting you from loss. Rather, it is a mechanism that limits losses from exceeding the relevant collateral balance.

Auto-deleveraging risk

Auto-deleveraging is an unusual feature of the Products that does not apply to most other OTC derivative products available in Australia.

In extreme market conditions, where the Security Fund is insufficient to absorb residual deficits from liquidated positions, an auto-deleveraging (ADL) mechanism may operate. Under ADL, the positions of profitable counterparties on the other side of the market may be forcibly reduced to offset losses that the Security Fund cannot cover.

ADL is a risk to all clients, not only those whose positions are being liquidated. If you hold a profitable position, that position may be reduced without your consent as a result of ADL. The selection of positions for ADL reduction is determined by the system based on ranking criteria. You will be notified if your position is reduced through ADL, but you may not receive advance warning. ADL events are more likely in conditions of extreme volatility, low liquidity or concentrated market positions.

Rollback risk

OKX may, acting reasonably, rollback trades executed during a specified period where OKX determines that trading during that period was materially affected by a system error, erroneous pricing, market manipulation or other circumstances that compromise the integrity of the Trading Platform. In such cases, affected transactions will be reversed and your account adjusted to reflect the position immediately before the affected period. A rollback may affect your open positions and account balance even if you were not involved in the conduct that triggered the rollback. See the Client Agreement for further details.

Position concentration risk

If the size of your positions or open Orders accumulates to a level that poses a considerable risk to other users or to the orderly operation of the Trading Platform, OKX may ask you to reduce your positions or, where exceptional circumstances exist, cancel your Orders or close part of your positions without your consent. See the Client Agreement for further details.

Crypto-asset market risk

The Products reference crypto-assets, which are highly volatile and may be subject to sudden and substantial price movements.

Crypto-asset prices may be influenced by a wide range of factors, including market sentiment, liquidity, technological developments, changes to blockchain protocols, cyber incidents, regulatory developments, macroeconomic events, concentration of holdings, exchange outages, market manipulation, stablecoin events and speculative activity.

Crypto-asset markets may move rapidly at any time, including outside ordinary business hours, and may experience sharp intraday movements. Because the Products reference those markets, your positions may gain or lose value very quickly.

Stablecoin risk

The Products are margined and settled in USDT only. This creates risks specific to USDT.

USDT is a stablecoin and is intended to maintain a stable value relative to the US dollar. However, there is no assurance that USDT will always maintain parity with the US dollar or remain liquid, redeemable, operationally available or acceptable in the market.

Risks relating to USDT include de-pegging risk, issuer risk, reserve and redemption risk, market confidence risk, regulatory intervention risk, wallet or transfer risk and market liquidity risk. If USDT were to lose value, become unavailable, become subject to restrictions or experience market dislocation, this could adversely affect the value of your collateral, the operation of margin requirements, your ability to manage positions and your ability to access or use funds.

Currency risk

The Products are denominated, margined and settled in USDT. If you convert Australian dollars to USDT in order to trade the Products, or convert USDT back to Australian dollars after closing a position, you are exposed to movements in the AUD/USDT exchange rate.

A decrease in the value of USDT relative to the Australian dollar may reduce the Australian dollar value of your collateral, any profits and any amounts returned to you, even if the USDT value of your position has not changed or has increased. Similarly, an increase in the value of USDT relative to the Australian dollar may increase the Australian dollar cost of acquiring USDT to fund your trading.

As described in section 5.2, fiat-to-crypto conversion services are provided by OKX Australia Pty Ltd, a separate entity within the OKX group, and are not covered by this PDS. The currency risk arising from any such conversion is borne by you and is not a risk that OKX Australia Financial manages on your behalf. This currency risk applies in addition to the other risks described in this section.

Funding risk

Perpetual futures contracts may involve recurring funding payments.

Depending on market conditions and the direction of your position, you may be required to pay funding or you may receive funding. The funding interval for a particular Product is disclosed on the Trading Platform and may differ between Products.

Funding payments may materially affect the profitability of a position. A position that appears profitable based on price movement alone may become less profitable or unprofitable once funding and other charges are taken into account. If a position is held for a prolonged period in circumstances where adverse funding applies, the cumulative funding payments may be significant.

Pricing risk

The prices at which Products are quoted, executed, valued and liquidated are determined in accordance with our systems, product design and pricing arrangements.

Although those prices are intended to reflect the relevant underlying market or reference market, they may not always be identical to prices available on any particular spot venue, exchange, index source or other market data source.

Differences may arise because of spreads, mark price methodologies, pricing conventions, index construction, lags, data source disruptions, market dislocation or other circumstances. These differences may affect execution, valuation, liquidation and realised profit or loss.

Execution risk

There is a risk that orders may not be executed at the price expected by you, or may not be executed at all.

In periods of volatility, illiquidity, fast markets or system strain, orders may be delayed, rejected, partially executed, re-priced or executed at a worse price than expected. Stop orders and limit orders are not guaranteed to be executed at the specified price.

Slippage may occur where the price at which a position is opened, closed or liquidated differs from the price expected by you at the time the order was submitted or the trigger was reached.

Market disruption risk

Crypto-asset markets and related infrastructure may be disrupted by outages, illiquidity, cyber incidents, market data failures, forks, protocol events, market closures, regulatory intervention, sanctions-related events or other extraordinary circumstances.

Where those circumstances affect the pricing, availability or orderly trading of the underlying crypto-asset or the Product itself, OKX may take action in accordance with the Client Agreement and our systems to protect market integrity, manage risk and maintain orderly operation. Such action may include rejecting orders, suspending trading, adjusting margin requirements, adjusting pricing inputs, restricting opening transactions, closing positions or taking other protective measures.

Such measures may adversely affect you. Market disruption may prevent you from opening, closing or managing positions when you want to do so.

Counterparty risk

When you trade the Products, your contract is with OKX as principal counterparty.

You are therefore exposed to the risk that OKX may fail to perform its obligations to you. If OKX were to become insolvent or otherwise unable to meet its obligations, you may become an unsecured creditor in respect of any amount owed to you.

The Products are not protected by any exchange guarantee, compensation arrangement or government guarantee.

Hedging counterparty and market exposure risk

OKX acts as matched principal to all client trades. When you place an order to enter a derivative position, OKX enters into two simultaneous trades: (i) OKX trades with you as counterparty, and (ii) OKX enters into an offsetting trade with a related entity within the OKX group incorporated outside Australia (the hedge counterparty). All client positions are fully hedged on a back-to-back basis, so that OKX's net market exposure is intended to be zero at all times.

This hedging model gives rise to a risk that OKX may be unable to meet its obligations to you if the hedge counterparty fails. If the hedge counterparty were to fail or be unable to perform its obligations, OKX’s hedge would be worthless but OKX would still owe its contractual obligations to you. In that scenario, OKX may be unable to meet those obligations if it has insufficient financial resources of its own to absorb the resulting market exposure.

Because OKX hedges all client positions with a single related offshore entity, the hedging risk described above applies to all clients and all positions. The effectiveness of the hedging arrangements depends entirely on the continued financial capacity and operational availability of the hedge counterparty.

Conflict of interest risk

Because OKX acts as principal counterparty to your transactions, there is an inherent conflict of interest in the Products.

OKX may have interests that differ from your interests in relation to the pricing, risk management and operation of the Products. For example, OKX determines or applies the pricing methodology, order handling framework, margining methodology, liquidation process and certain discretionary powers under the Client Agreement.

Although OKX is required to have arrangements to manage conflicts of interest and to comply with its legal obligations as an Australian financial services licensee, those conflicts cannot be fully eliminated.

Operational and systems risk

The Products are made available through electronic systems and depend on the continued availability and proper functioning of technology, communications networks, software, infrastructure, market data services, wallet systems and related operational processes.

You may suffer loss as a result of systems failures, software defects, connectivity interruptions, cyber incidents, delays, outages, maintenance events, hardware failures, data corruption, third-party service failures or human error.

Those issues may affect your ability to place, modify or cancel orders, monitor positions, transfer assets, access the platform or receive notices or confirmations.

Cybersecurity risk

Digital asset and trading platforms are exposed to heightened cybersecurity risks, including hacking, credential theft, malware, phishing, denial-of-service attacks, insider compromise, software vulnerabilities and unauthorised access to systems or wallets.

Although security controls may be implemented, no system is immune from compromise. A cyber incident affecting OKX, a related service provider, a blockchain network, a wallet provider, a market data source or any other relevant system may impair trading, custody, account access or the operation of the Products.

Blockchain and protocol risk

Underlying crypto-assets depend on blockchain networks and related protocols. Those networks and protocols may be affected by forks, upgrades, bugs, attacks, validator failures, congestion, changes in governance, smart contract vulnerabilities or other technical events.

These events may affect the price, liquidity, availability or continued existence of the relevant crypto-asset and therefore may affect the Products that reference it. In some cases, such events may require us to suspend or restrict trading, adjust pricing inputs or take other action in accordance with the Client Agreement.

Liquidity risk

There may be insufficient liquidity in the Product or the relevant underlying market when you wish to trade.

Low liquidity may increase spreads, increase slippage, delay execution, impair price discovery and affect the price at which your positions are valued or liquidated. Liquidity conditions may worsen rapidly in stressed markets.

Legal and regulatory risk

The legal and regulatory treatment of crypto-assets, stablecoins and digital asset derivatives is evolving in Australia and internationally.

Changes in law, regulation, regulatory guidance, enforcement priorities, licensing requirements, sanctions measures, tax treatment, prudential requirements or market infrastructure rules may adversely affect the availability, operation, pricing, profitability or legality of the Products or the underlying assets to which they relate.

Regulatory action affecting a crypto-asset, a stablecoin issuer, a trading venue, a service provider or a related market may have immediate adverse effects on the Products.

Taxation risk

The taxation treatment of the Products depends on your individual circumstances and may be complex. The tax treatment of derivatives referencing crypto-assets and of stablecoin-settled products may change over time.

You should obtain independent taxation advice before trading the Products. See section 10 for further information.

No cooling-off rights

Cooling-off rights do not apply to the Products. Once you enter into a transaction, you are exposed to market movements and remain bound by the Product terms and the Client Agreement.

Past performance is not a reliable indicator

Any historical price performance of a crypto-asset, a Product or a trading strategy is not a reliable indicator of future performance. Crypto-asset markets can change rapidly and unexpectedly.

4.4 Who the Products may be suitable for

The Products are generally intended for clients who understand leveraged derivatives, understand the risks of crypto-asset markets, are willing and financially able to bear losses and are able to monitor and manage positions actively.

The Products may be used for speculative or hedging purposes.The Products are generally not suitable for clients seeking capital preservation, passive investment exposure, low-risk products or products that do not require active monitoring.

You should refer to the TMD for more detailed information regarding the class of consumers for whom the Products are likely to be appropriate.

5. HOW TO TRADE

5.1 Your trading account

Before you can access the Products, you must have a trading account and complete the onboarding steps we require from time to time. Those steps may include identity verification, acceptance of the relevant terms and completion of assessments and questionnaires relating to the Products.

As described in section 1.4, the OKX Platform maintains separate accounts, including a funding account, a trading account and an Earn account (if Earn is enabled by you). The Products are traded through your trading account only. USDT held in your funding account or Earn account is not recognised as collateral for the Products, is not taken into account for margin purposes, and is not at risk from derivatives trading.

Your trading account may support a range of services, assets and functions. However, for the Products described in this PDS, only USDT is recognised as collateral. The fact that other assets may be visible in the same trading account does not mean those assets are counted for margin, equity or liquidation purposes in relation to the Products.

We may refuse to permit you to access the Products, suspend access to the Products or impose restrictions on access where permitted by the Client Agreement or required by law.

5.2 Funding your trading account for the Products

To trade the Products, you must have sufficient USDT available in your trading account to satisfy the applicable Initial Margin requirements. OKX does not accept fiat currency (such as Australian dollars) directly for the purpose of opening or maintaining positions in the Products.

Although your trading account may hold multiple digital assets, only USDT is recognised as collateral for the Products. It is your responsibility to ensure that sufficient USDT is available if you wish to open or maintain positions in the Products.

You may acquire USDT through spot trading, conversion functionality, or other methods made available on the platform from time to time. Those services are not themselves covered by this PDS and may be subject to separate terms and conditions.

Fiat-to-crypto conversion and spot trading services, including the ability to convert AUD to USDT, are provided by OKX Australia Pty Ltd (ACN 636 269 040), a separate entity within the OKX group that is registered with AUSTRAC as a digital currency exchange provider. OKX Australia Pty Ltd is not the issuer of the Products described in this PDS and does not hold an AFSL. The services it provides are not covered by this PDS.

If you use the conversion services, you should be aware that:

• you bear the risk of any price movement in USDT between the time of conversion and the time you open a position in a Product.

• operational delays may occur between the time you initiate a fiat deposit or conversion and the time USDT is credited to your trading account and available for derivatives trading; and

• the regulatory protections applicable to the Products (including the AFSL obligations of OKX Australia Financial) do not extend to the conversion or spot trading services;

• the fiat-to-USDT conversion is a separate transaction from any derivatives trade and is subject to its own terms, fees and risks.

You may also acquire USDT through other means, including by transferring USDT from an external wallet. Any such transfer is subject to blockchain confirmation times and platform processing requirements.

Operational delays may occur in connection with deposits, conversions, transfers, blockchain confirmations, wallet movements or other account activity. You should not assume that USDT will become available for trading immediately after you initiate a transfer, conversion or deposit.

5.3 Opening a position

A position is opened by submitting an order through the Trading Platform in relation to a Product made available by us from time to time.

If you submit an order to buy a Product, you are generally taking a long position. If you submit an order to sell a Product, you are generally taking a short position.

Before a position can be opened, you must have sufficient USDT available in your trading account to satisfy the applicable Initial Margin requirement. If sufficient USDT is not available, the order may be rejected or may not be capable of being executed.

The contract comes into existence when your order is accepted and executed by our systems in accordance with the terms applicable to the Product and the Client Agreement.

5.4 Closing a position

How you close a position depends on the position mode you are using.

In One-way mode, a position may be closed by entering an opposite transaction. For example, if you hold a long position, you close it by selling the same contract. The opposite transaction reduces or closes the existing position.

In Hedge mode, long and short positions in the same contract are held independently and are not netted against each other. To close a position in Hedge mode, you must select the specific long or short position you wish to close. Entering an opposite transaction in Hedge mode will open a new position on the other side, not close the existing one.

A position may also be closed automatically by our systems, including where liquidation occurs, where we exercise powers under the Client Agreement, or where trading in the Product is suspended, restricted or terminated.

5.5 Order types

The Trading Platform may make available a range of order types, which may include market orders, limit orders, stop orders and other conditional or advanced order functionality.

The order types made available may vary over time and between Products. Details of the order functionality available at any given time will be disclosed on the Trading Platform.

You should be aware that not all order types guarantee execution at the price specified by you. In particular, stop orders and limit orders may not be filled at the expected price, may be only partially filled, or may not be filled at all in volatile, fast-moving or illiquid markets.

The availability of a particular order type does not remove the need for you to monitor your positions actively.

5.6 Pricing and execution

Prices for the Products are determined in accordance with our systems, product design and pricing arrangements.

Although prices are intended to reflect the relevant underlying market or reference market, they may differ from prices available on any particular trading venue or data source. Differences may arise because of spreads, mark price methodologies, pricing conventions, index construction, lags, data source interruptions, market dislocation, liquidity conditions or other factors.

When you submit an order, execution is subject to market conditions, available liquidity, system conditions and the operation of our controls. There is no guarantee that an order will be executed at the price expected by you or at all.

In volatile or illiquid conditions, orders may be delayed, rejected, re-priced, partially executed or executed at a worse price than expected. Slippage may occur.

5.7 Mark price, reference price and valuation

The Products may use a mark price, index price, reference price, last traded price or other valuation input for different purposes, including pricing, funding, margining and liquidation.

The methodology applicable to a Product may differ from the methodology used on a spot trading venue or another derivatives venue. The relevant pricing methodology and Product specifications are disclosed on the Trading Platform or otherwise made available by us from time to time.

The mark price is designed to reduce the impact of short-term price manipulation on liquidation triggers and may differ from the last traded price. Because liquidation thresholds are assessed against the mark price rather than the last traded price, a brief price spike on the Trading Platform that is not reflected in the broader market should not, on its own, trigger liquidation.

You should not assume that the price visible on a spot market, index source or third-party platform will be the price used for margin, liquidation or valuation purposes in relation to the Products.

5.8 Funding payments

Because perpetual futures contracts do not have a fixed expiry date, funding payments may apply in order to help align the value of a Product with the relevant reference market.

Depending on market conditions and the direction of your position, you may be required to pay funding or you may receive funding.

The applicable funding interval for each Product, which may range from every 1 hour to every 8 hours, is disclosed on the Trading Platform and may differ between Products.

Funding payments may materially affect the profitability of a position, especially where a position is held for a longer period. You should review the funding information displayed on the Trading Platform before opening or maintaining a position.

5.9 Trading hours and platform availability

The Trading Platform is intended to be available on a continuous basis, subject to scheduled maintenance, unscheduled outages, market disruptions, system issues, connectivity problems, cybersecurity incidents and other events that may affect availability.

The availability of the Trading Platform or of a particular Product may differ from time to time. There may be periods during which trading is unavailable, restricted or disrupted.

We do not guarantee uninterrupted availability of the Trading Platform or of any Product.

5.10 Suspensions, restrictions and disrupted markets

We may, in accordance with the Client Agreement and our systems, reject orders, suspend trading, restrict opening transactions, restrict closing transactions, amend margin requirements, adjust pricing inputs, close positions or take other protective action where we reasonably consider it necessary to protect market integrity, manage risk or respond to a disrupted market or other extraordinary event.

This may occur in circumstances including, without limitation:

• extreme volatility or illiquidity in the relevant market;

• outages affecting market data or pricing sources;

• forks, protocol events or other technical events affecting the relevant crypto-asset;

• regulatory intervention or legal restrictions;

• cybersecurity incidents;

• sanctions-related issues; or

• system failures or operational incidents affecting the platform or related infrastructure.

These actions may adversely affect you and may prevent you from opening, closing or managing positions when you wish to do so.

5.11 Confirmations and records

Information regarding your executed transactions, open positions, realised and unrealised profit and loss, funding and other relevant account activity will generally be made available through the Trading Platform and may also be provided through other communications channels made available by us from time to time.

It is your responsibility to review transaction confirmations, account information and position information promptly and to raise any discrepancy with us as soon as practicable.

5.12 Reliance on the Trading Platform

You are responsible for familiarising yourself with the operation of the Trading Platform and the Product specifications applicable to the Products you trade.

The Trading Platform may contain important information regarding order handling, Product specifications, funding intervals, pricing methodologies, margin parameters, liquidation logic and other operational features. You should review that information carefully before trading.

The fact that a Product is displayed on the Trading Platform does not mean it will remain available indefinitely or that trading conditions for that Product will remain unchanged.

6. MARGINS

6.1 Overview of margin framework

The Products are leveraged OTC derivatives and are subject to margin requirements. Margin is the collateral and account equity that must be maintained in order to open and continue to hold positions in the Products. Only USDT is recognised as collateral for the Products. Other digital assets held in the same trading account are not recognised as collateral and are not taken into account for margin, equity or liquidation purposes in relation to the Products.

The key formulas used in the margin framework are set out in this section 6 (Margins). A summary of the principal calculations is provided below for reference:

Initial Margin = Notional value at time of opening / Leverage (minimum 50% at 2:1 maximum leverage)

Maintenance Margin = 25% × Notional value at time of opening

Account equity (Cross) = USDT balance + Unrealised P&L on all cross positions − amounts committed to pending orders, isolated margin allocations and order feesAccount equity (Isolated) = Margin balance for that position + Unrealised P&L on that position

Maintenance margin ratio = Account equity ÷ (Maintenance Margin + Liquidation fees)

Unrealised P&L (long) = Contracts × Multiplier × Size × (Mark price − Average open price)

Unrealised P&L (short) = Contracts × Multiplier × Size × (Average open price − Mark price)

These formulas use simplified notation. The precise calculation methodology, including the treatment of partial fills, multiple positions and fee components, is set out in the relevant subsections below and in the Client Agreement.

• Initial Margin: the minimum collateral required to open a position;

• Maintenance Margin: the minimum account equity required to keep positions open;

• Margin close-out protection: automatic liquidation if account equity falls to the applicable threshold;

• Negative balance protection: losses limited to the USDT balance available for derivatives trading.

Margining is automated through our systems. You are responsible for monitoring your trading account, your open positions, your available USDT and your margin sufficiency at all times.

6.2 Initial Margin

Initial Margin is the minimum amount of USDT that must be available in your trading account in order to open a new position.

For retail clients trading the Products, the Initial Margin is calculated as the notional value of the position at the time it is opened, divided by the leverage ratio selected. Because the maximum leverage for retail clients is 2:1, the minimum Initial Margin is 50% of the notional value.

The Initial Margin for a position is calculated as:

Initial Margin = Notional value at time of opening / Leverage

where Notional value = Number of contracts × Contract multiplier × Contract size × Entry price

For example, opening a long BTC-USDT position of 100 contracts × 0.01 BTC × 100,000 USDT = 100,000 USDT notional value. Initial Margin = 50% × 100,000 = 50,000 USDT.

Once a position is opened, the Initial Margin for that position is fixed at the amount calculated at the time of opening. It does not fluctuate with subsequent changes in the market price of the underlying crypto-asset. This means that the regulatory margin thresholds for a position are determined by reference to the notional value at the time the position was opened, not its current market value.

If you hold multiple open positions, the aggregate Initial Margin requirement is the sum of the Initial Margin amounts for each individual open position, each calculated by reference to the notional value at the time that position was opened.

A position cannot be opened unless sufficient USDT is available to satisfy the applicable Initial Margin requirement.

6.3 Maintenance Margin

Maintenance Margin is the minimum amount of account equity that must be maintained in order to keep positions open.

For retail clients, the Maintenance Margin for a position is 25% of the notional value of the position at the time it was opened. This applies regardless of the leverage ratio selected by the client. For example, whether a client opens a position at 2x leverage (Initial Margin = 50% of notional) or at 1x leverage (Initial Margin = 100% of notional), the Maintenance Margin is 25% of the notional value in both cases.

The Maintenance Margin for a position is calculated as:

Maintenance Margin = 25% × Notional value at time of opening

For Australian retail clients, the position tier maintenance margin ratio is fixed at 25% of the notional value of the position at the time it was opened, regardless of position size or tier. The aggregate Maintenance Margin for your account is the sum of the Maintenance Margin amounts for each individual open position.

If your account equity falls to or below the aggregate Maintenance Margin requirement for your open positions, some or all of your positions may be automatically liquidated in accordance with our systems and the Client Agreement.

Because both Initial Margin and Maintenance Margin are calculated by reference to the notional value at the time of opening and remain fixed, you can determine your liquidation threshold at the time you open a position.

6.4 Account equity

For the Products, account equity is determined as follows:

Cross-Margin mode:

Account Equity = USDT balance in the trading account + unrealised profit and loss on all open cross-margin positions − USDT committed to pending open orders − USDT allocated to isolated margin positions − order fees for pending orders

The deductions above mean that placing new orders or allocating USDT to isolated positions reduces the account equity available for cross-margin purposes, even before those orders are filled. You should monitor the effective account equity displayed on the Trading Platform, which reflects these deductions in real time.

Isolated Margin mode:Account Equity (for that position) = USDT allocated to the isolated position + unrealised profit and loss on that position

In both cases, only the USDT balance is taken into account. Other crypto-assets held in the same trading account, including any non-USDT stablecoins, are not counted towards account equity for the purposes of margin or liquidation in relation to the Products.

Unrealised profit and loss on an open position is calculated as follows:

Long position: Unrealised P&L = Number of contracts × Contract multiplier × Contract size × (Mark price − Average entry price)

Short position: Unrealised P&L = Number of contracts × Contract multiplier × Contract size × (Average entry price − Mark price)

Unrealised P&L is recalculated continuously based on the current mark price. A positive value represents unrealised profit; a negative value represents unrealised loss.

6.5 Cross‑Margin mode

In Cross-Margin mode, all open positions in the Products share the same USDT collateral pool. Account equity is calculated on an aggregate basis across all open cross-margin positions.

This means that unrealised profits on one position may offset unrealised losses on another position for the purpose of maintaining account equity above the liquidation threshold. Conversely, losses on one position may reduce available equity across all positions and may trigger liquidation of other positions.

If account equity falls to or below the aggregate Maintenance Margin requirement for all open cross-margin positions, liquidation may be triggered in accordance with our systems.

The maintenance margin ratio in Cross-Margin mode is calculated as:

Maintenance margin ratio = (Account Equity as defined in section 6.4) ÷ (Aggregate Maintenance Margin + Liquidation fees)

where Liquidation fees = Aggregate notional value of cross-margin positions × Taker fee rate

When this ratio falls to 100% or below, the liquidation process described in section 6.7 (Liquidation) is triggered. A courtesy pre-liquidation alert may be sent when the maintenance margin ratio reaches the alert threshold. The default alert threshold is 120%, but you may adjust this to 130% or 150% in your trading settings.

Because Account Equity is reduced by amounts committed to pending orders and isolated margin allocations (see section 6.4 (Account equity)), placing new orders or allocating margin to isolated positions can reduce the maintenance margin ratio for your cross-margin positions, even if market prices have not changed.

6.6 Isolated Margin mode

In Isolated Margin mode, a specified amount of USDT is allocated to an individual position. That position's margin and liquidation threshold are assessed independently of any other open positions and any unallocated USDT balance.

This means that the maximum loss on an isolated position is generally limited to the amount of USDT allocated to that position. Due to margin close-out protection, liquidation is triggered before the full amount allocated is exhausted. However, the full amount allocated may be depleted in extreme market events (for example, due to slippage, illiquidity or rapid price movement). Losses on an isolated position do not directly reduce the collateral available for other positions, and other positions are not directly affected by the liquidation of an isolated position.

However, in Isolated Margin mode, the liquidation threshold for that position may be reached more quickly because the collateral base is smaller. Isolated positions may be liquidated at or before the applicable threshold in accordance with our systems.

You should carefully consider the implications of choosing Isolated Margin mode, including the effect on the amount of collateral supporting a position and the circumstances in which liquidation may occur.

The maintenance margin ratio for an isolated position is calculated as:

Maintenance margin ratio = (Margin balance + Unrealised P&L) ÷ (Notional value at opening × (25% + Taker fee rate))

where Margin balance is the USDT allocated to the isolated position (which may be more than the minimum Initial Margin if you have added additional margin).

The estimated liquidation price for an isolated long position can be derived as follows:

Estimated liquidation price (long) ≈ Avg. open price × (1 + Position tier MMR%) - Margin balance / (Face value × |Contracts| × Multiplier)

Estimated liquidation price (short) ≈ Avg. open price × (1 - Position tier MMR%) + Margin balance / (Face value × |Contracts| × Multiplier)

For Australian retail clients, Position tier MMR% is 25%.

These are approximations. The actual liquidation trigger depends on the mark price and the precise maintenance margin ratio calculation in the system. You should refer to the estimated liquidation price displayed on the Trading Platform, which is recalculated in real time.

6.7 Liquidation

If your account equity falls to or below the applicable Maintenance Margin threshold (that is, the maintenance margin ratio reaches 100% or lower), your positions will be automatically liquidated in accordance with our systems and the Client Agreement. Liquidation is automated and may occur without prior notice, without manual intervention and without regard to any courtesy warnings, alerts or notifications that may or may not have been sent.

Pre-liquidation alerts: The system may send a courtesy alert when the maintenance margin ratio reaches the alert threshold. The default alert threshold is 120%, but you may adjust this to 130% or 150% in your trading settings on the platform. This alert is sent through the Trading Platform, push notifications or email. However, you should not rely on receiving this alert, and the receipt or non-receipt of an alert does not delay or prevent the liquidation process.

Order cancellation: When the maintenance margin ratio falls to 100% or below, the system will first attempt to restore the margin ratio by automatically cancelling unfilled orders that require additional margin. In Cross-Margin mode, the system cancels unfilled cross-margin orders and isolated-margin opening orders. In Isolated Margin mode, the system cancels all orders associated with the relevant position. If the cancellation of orders restores the maintenance margin ratio above 100%, no further liquidation action is taken.

Partial liquidation. If the maintenance margin ratio remains at or below 100% after order cancellation, the system proceeds to partial liquidation. Partial liquidation is designed to reduce position size progressively rather than closing all positions at once, which may reduce the market impact and potential loss to you. The partial liquidation process proceeds in two phases:

• Phase 1 - Hedge pair reduction: If you hold positions in the same contract in opposite directions under hedge mode, the system will first reduce those offsetting positions.

• Phase 2 - Progressive position reduction: If Phase 1 does not restore the margin ratio, the system ranks remaining positions by market liquidity and progressively reduces the highest-liquidity positions first. In Cross-Margin mode, the position size is reduced by one tier level per liquidation step. In Isolated Margin mode, the position size is reduced by two tier levels per step. Each reduction step is followed by a reassessment of the margin ratio. Liquidation stops as soon as the margin ratio is restored above 100%.

Full liquidation. If a position has been reduced to Tier 1 (the lowest tier) and the margin ratio remains at or below 100%, the remaining position is fully liquidated at the bankruptcy price. The bankruptcy price is the price at which the position equity is reduced to zero - it represents the theoretical price at which the entire margin allocated to the position is consumed.

Partial liquidation is intended to reduce the severity of liquidation outcomes for clients by allowing smaller portions of a position to be closed progressively, rather than closing everything at once in a potentially illiquid market. However, partial liquidation does not guarantee a better outcome, and in fast-moving markets the system may proceed through multiple liquidation steps in rapid succession.

Liquidation fees. When a position is liquidated, two types of fees apply:

• Liquidation taker fee: calculated at the taker fee rate applicable to your current fee tier, applied to the liquidated position size.

• Liquidation clearance fee: an additional fee to cover market fluctuations and slippage during the liquidation process, calculated as:
  Liquidation clearance fee = Face value × Contract multiplier × Number of liquidated positions × Mark price × Position tier buffer ratio

The position tier buffer ratio does not exceed 1%. The net proceeds from liquidation fees and liquidation clearance fees are contributed to the Security Fund. However, Negative Balance Protection will always apply such that you cannot lose more than the amount of USDT deposited in respect of the Products.

Security Fund. OKX maintains a Security Fund that may be used to absorb residual deficits arising from liquidation events where the proceeds of close-out are insufficient to cover losses. The Security Fund is funded from liquidation fee proceeds and from contributions by OKX. The use of the Security Fund is at OKX's discretion. It is not guaranteed, and its availability depends on the fund's balance, the size of the deficit and prevailing market conditions. You should not rely on the Security Fund as a guarantee against loss.

Auto-deleveraging (ADL). If the Security Fund is insufficient to absorb residual deficits, the auto-deleveraging mechanism may operate as a last resort. Under ADL, the positions of profitable counterparties on the other side of the market may be forcibly reduced to offset the shortfall. ADL is a risk to all clients. If you hold a profitable position, it may be reduced without your consent as a result of ADL.

This section provides a summary of ADL only. The detailed operational mechanics of the liquidation process, including the order cancellation sequence, partial liquidation algorithm and ADL ranking, are set out in the Client Agreement. In the event of any inconsistency between this summary and the Client Agreement, the Client Agreement prevails.

6.8 Negative balance protection

Retail clients are provided with negative balance protection in respect of the Products.

This means that losses on the Products are limited to the USDT balance available for derivatives trading in the trading account. You will not be required to pay any amount to OKX in excess of the USDT balance in the trading account at the time the relevant loss crystallised.

Negative balance protection is an important retail client protection, but it does not prevent you from losing the entire USDT balance available for derivatives trading. It limits losses from exceeding that balance, but it does not preserve any minimum amount.

Negative balance protection is a term of your contract with OKX and applies regardless of the availability of the Security Fund or any other internal risk management mechanism. This means that even if the Security Fund is exhausted or unavailable, OKX is contractually obligated to ensure that your losses on the Products do not exceed the USDT balance available for derivatives trading in the trading account.

6.9 Adding margin and changing leverage

You may transfer additional USDT into your trading account or allocate additional USDT to an isolated position at any time, subject to available balances and platform availability.

You may also change the leverage setting on an open position. Changing the leverage will change the Initial Margin for that position, because Initial Margin is calculated as notional value divided by leverage. Increasing leverage lowers the Initial Margin and frees up USDT as available equity.

Decreasing leverage increases the Initial Margin and reduces available equity. However, changing leverage does not change the Maintenance Margin, which remains fixed at 25% of the notional value at the time of opening regardless of the leverage ratio selected.

This means that adding margin to an account or position may increase the available equity buffer before liquidation is triggered, but it does not change the regulatory thresholds against which your account is assessed.

6.10 Worked examples

The following examples are illustrative only. They are based on simplified assumptions and are intended to demonstrate how the margin framework operates in principle. Actual outcomes will depend on market conditions, pricing, fees, funding, slippage, liquidation mechanics and other variables.

Example 1: Long position, 2x leverage, Cross-Margin

USDT deposited: 5,000 USDT

Position: Long BTC-USDT perpetual

Notional value at opening: 10,000 USDT

Leverage: 2x

Initial Margin: 5,000 USDT

Maintenance Margin (25% of notional): 2,500 USDT

Free margin after opening: 0 USDT

If the price of BTC falls by 25%, the unrealised loss on the position is approximately 2,500 USDT. Account equity falls to approximately 2,500 USDT, which equals the Maintenance Margin threshold. Liquidation may be triggered.

Maximum loss in this example: 5,000 USDT (Note: Due to margin close-out protection, liquidation is triggered earlier before the full amount deposited is exhausted. However, the full amount deposited may be depleted in extreme market events). Negative balance protection applies.

Example 2 — Long position, 1x leverage, Cross-Margin

USDT deposited: 10,000 USDT

Position: Long BTC-USDT perpetual

Notional value at opening: 10,000 USDT

Leverage: 1x

Initial Margin (100% at 1x leverage): 10,000 USDT

Maintenance Margin (25% of notional): 2,500 USDT

Account equity is 10,000 USDT plus unrealised P&L.

If the price of BTC falls by 75%, the unrealised loss is approximately 7,500 USDT. Account equity falls to approximately 2,500 USDT, which equals the Maintenance Margin threshold. Liquidation may be triggered.

Maximum loss in this example: 10,000 USDT (Note: Due to margin close-out protection, liquidation is triggered earlier before the full amount deposited is exhausted. However, the full amount deposited may be depleted in extreme market events). Negative balance protection applies.

Example 3: Short position, 2x leverage, Isolated Margin

USDT allocated to isolated position: 2,000 USDT

Position: Short ETH-USDT perpetual

Notional value at opening: 4,000 USDT

Leverage: 2x

Initial Margin (50% at 2x leverage): 2,000 USDT

Maintenance Margin (25% of notional): 1,000 USDT

If the price of ETH rises by 25%, the unrealised loss on the position is approximately 1,000 USDT. Equity for this isolated position falls to approximately 1,000 USDT, which equals the Maintenance Margin threshold. Liquidation of this isolated position may be triggered.

Maximum loss on this isolated position: 2,000 USDT. Note: Due to margin close-out protection, liquidation is triggered earlier before the full amount allocated is exhausted. However, the full amount allocated may be depleted in extreme market events. Other USDT balances and positions in the trading account are not affected by the liquidation of this isolated position.

For additional worked examples, including maintenance margin ratio calculations, liquidation progression scenarios and the effect of adding or removing margin, refer to the Cross-Margin Trading help article and the Isolated Mode help article available at 708lz9ho.com/en-au.

6.11 Important points about margin

You should be aware of the following:

• No margin calls: OKX is not obligated to issue margin calls before liquidation occurs. Liquidation is automatic. While courtesy notifications may be sent through the Trading Platform, push notifications or email, you should not rely on receiving them.

• Your responsibility: You are solely responsible for monitoring your account equity, margin sufficiency and open positions at all times.

• Operational delays: There may be delays in transferring USDT into your trading account because of blockchain congestion, platform processing times, wallet infrastructure issues or other operational factors.

• Margin requirements may change: OKX may, in its discretion and in accordance with the Client Agreement, change margin requirements, including by increasing the minimum margin required for particular Products or positions.
  

7. CLIENT QUALIFICATION POLICY

7.1 Overview

Before you are permitted to access the Products, you must complete our onboarding process for retail derivatives. This process is designed to assist us in determining whether the Products are likely to be appropriate for you and whether you have an adequate understanding of the key features and risks of the Products.

The onboarding process currently consists of two stages: a suitability assessment and a knowledge assessment. Both must be completed satisfactorily before access to the Products is granted.
Our assessment does not constitute personal advice. A decision by us to permit you to access the Products should not be understood as a representation that the Products are suitable for your individual circumstances. You remain responsible for determining whether the Products are appropriate for you.

7.2 Suitability assessment

The suitability assessment is designed to assess whether the Products are likely to be appropriate for you having regard to your financial situation, investment objectives and risk tolerance.

The assessment consists of a series of questions relating to matters including your source of income, annual income, liquid assets, surplus income, financial stability, intended allocation of capital to derivatives trading, capacity to bear total loss, primary trading objectives, intended investment timeframe, risk appetite and prior experience with leveraged products.

Certain responses will result in an automatic determination that the Products are not likely to be appropriate for you. If this occurs, your application for access to the Products will be declined. You will not be told which response triggered the determination.

If your application is declined as a result of the suitability assessment, you will not be permitted to re-apply for access to the Products for a period of 180 days.

7.3 Knowledge assessment

If you pass the suitability assessment, you will be required to complete a knowledge assessment.

The knowledge assessment consists of questions drawn randomly from a question bank covering key concepts relevant to the Products, including leverage, margin, liquidation, volatility, order types, funding payments, counterparty risk and regulatory protections. Questions are drawn from multiple difficulty levels.

You must answer at least 10 out of 12 questions correctly in order to pass the knowledge assessment. If you do not pass the knowledge assessment:

• after your first and second unsuccessful attempts, you may re-attempt the assessment after a 24-hour cooling-off period; and

• after your third or any subsequent unsuccessful attempt, you may re-attempt the assessment after a 30-day cooling-off period.

You will not be granted access to the Products until both the suitability assessment and the knowledge assessment have been completed satisfactorily.

7.4 Record keeping

Records of your suitability and knowledge assessments, including your responses and the outcomes, are retained by us for a minimum of 7 years in accordance with our regulatory obligations.

7.5 Limitations

The assessments described in this section are based on the information you provide to us. We rely on the accuracy and completeness of your responses. If you provide inaccurate or misleading information, the outcome of the assessment may not reflect your actual circumstances.

A decision by us to permit access to the Products does not constitute personal advice or a determination that the Products are suitable for you. It remains your responsibility to consider this PDS, the FSG, the TMD and the Client Agreement and to determine whether the Products are appropriate for your objectives, financial situation and needs.

8. CUSTODY AND CLIENT ASSET ARRANGEMENTS

8.1 Overview

This section describes how your USDT collateral for the Products is held and the protections, if any, that apply to those assets.

You should read this section carefully. The arrangements described below differ in important respects from those that may apply where a financial services licensee holds client money or other regulated financial products on behalf of a client.

8.2 How your USDT is held

USDT used as collateral for the Products is held within the platform infrastructure managed by entities within the OKX group and is not held by an independent custodian. USDT collateral is not held in a segregated trust account or a statutory client money account.

Although the statutory client money trust requirements under Part 7.8 of the Corporations Act do not apply to USDT (see section 8.3 (Client money rules do not apply) below), OKX maintains operational segregation of client USDT from its own corporate funds. This segregation is an operational practice and does not create a statutory trust or provide the creditor protections that would apply under the client money provisions of the Corporations Act.

Under the matched principal model, OKX Australia Financial Pty Ltd is the counterparty to each of your derivative positions. All client positions are fully hedged on a back-to-back basis with a related entity within the OKX group incorporated outside Australia (the hedge counterparty). The USDT collateral supporting your positions is managed within the broader OKX group platform infrastructure and is not held by an independent custodian.

OKX does not hold fiat currency in connection with the Products. All collateral, margin, settlement, funding payments and other amounts are denominated and transacted in USDT.

8.3 Client money rules do not apply

USDT is a crypto-asset. It is not "money" for the purposes of the client money provisions in Part 7.8 of the Corporations Act.

Accordingly, the statutory client money rules, including the requirements relating to client money trust accounts, segregation and use of client money, do not apply to USDT used as collateral for the Products.

This is an important difference between the Products described in this PDS and some other financial products where client money protections may apply. You should not assume that USDT held as collateral for the Products receives the same legal treatment or statutory protections as money paid to an Australian financial services licensee in other contexts.

8.4 No deposit protection or government guarantee

The Products are not deposit products. The USDT held as collateral for the Products is not protected by the Australian Government's Financial Claims Scheme, any deposit insurance scheme or any exchange guarantee or compensation fund.

8.5 Security Fund and auto-deleveraging

OKX maintains a Security Fund that may be used to absorb residual deficits arising from liquidation events where the proceeds of close-out are insufficient to cover the client's losses.

In addition, an auto-deleveraging (ADL) mechanism may operate in extreme market conditions to manage system-wide risk. If the Security Fund is insufficient, the ADL mechanism may reduce the positions of profitable counterparties on the other side of the market.

These mechanisms are designed to support the operation of negative balance protection and to maintain orderly market conditions. Their availability and operation are at the discretion of OKX and subject to market conditions, system capacity and other factors. They do not constitute a guarantee against loss and should not be relied upon as such.

8.6 Insolvency risk

If OKX were to become insolvent or otherwise unable to meet its obligations, you may become an unsecured creditor in respect of amounts owed to you, including the USDT balance in your trading account.

Because the statutory client money and client property protections described above do not apply, there may be limited statutory protection for your USDT in the event of OKX's insolvency. Your recovery may depend on the general law of insolvency and the terms of the Client Agreement.

9. FEES, COSTS AND CHARGES

9.1 Summary of fees and charges

You may be required to pay fees, funding payments and other charges in connection with the Products. All fees and charges described in this section are denominated in USDT and are deducted directly from your trading account balance at the time they are incurred.

The following table summarises the principal fees associated with the Products:

Current fee rates are set out at: app.708lz9ho.com/en-au/fees.

9.2 Trading fees

A trading fee applies each time you open or close a position. Trading fees are calculated on a maker/taker basis.

A taker order is one that is filled immediately against existing orders on the order book. A maker order is one that rests on the order book and adds liquidity. Whether an order is treated as a maker or taker order depends on whether it is filled immediately or rests on the order book, not on the order type selected. For example, a limit order placed at or beyond the current market price may be filled immediately and treated as a taker order. Maker fees are typically lower than taker fees to incentivise liquidity provision.

The trading fee for USDT-margined perpetual futures is calculated as:

Trading fee = Fee rate × (Number of contracts × Contract multiplier × Contract size × Fill price)

The current maker and taker fee rates applicable to Australian retail clients are set out in the fee schedule on the Trading Platform at app.708lz9ho.com/en-au. Fee rates may vary by fee tier. You should check the fee schedule before opening a position.

The same fee rate applies to opening and closing a position. Fees are charged when the order is filled and are settled in USDT.

Worked example (using illustrative rates):

The following example uses a taker fee rate of 0.05% and a maker fee rate of 0.02% for illustration only. These are not the actual fee rates. Refer to the fee schedule on the Trading Platform for current rates.

Assume you open a long BTC-USDT position with a notional value of 100,000 USDT as a taker.

Trading fee = 0.05% x 100,000 = 50 USDT

When you close the same position as a maker:

Trading fee = 0.02% x 100,000 = 20 USDT

Total round-trip trading fees for this position: 70 USDT.

9.3 Funding fees

Perpetual futures contracts do not have a fixed expiry date. To help keep the contract price aligned with the relevant spot market, funding fees are periodically exchanged between traders holding long positions and traders holding short positions.

When the funding rate is positive, traders with long positions pay a funding fee to traders with short positions. When the funding rate is negative, traders with short positions pay a funding fee to traders with long positions. OKX does not charge a service fee for the funding mechanism. It facilitates direct transfers between traders.

Funding fees are assessed at regular intervals. The funding interval for each Product is disclosed on the Trading Platform and may range from every 1 hour to every 8 hours, depending on the Product. If you close your position before the assessment time, you do not pay or receive funding for that interval.

The funding fee is calculated as:

Funding fee = Position value × Funding ratewhere Position value = Number of contracts × Contract size × Contract multiplier × Mark price

Worked example:

You hold a long BTC-USDT position with a position value of 10,000 USDT.

The funding rate is +0.01%.

Funding fee = 10,000 × 0.01% = 1 USDT, paid by you (long) to short position holders.

Important: Funding fees can trigger liquidation. Funding fees are collected in full at assessment time, even if this causes your account equity to fall below the Maintenance Margin threshold. If the deduction of a funding fee reduces your maintenance margin ratio to 100% or below, partial or full liquidation may be triggered as described in section 6.7 (Liquidation). You should ensure that you have a sufficient equity buffer above the liquidation threshold to absorb upcoming funding fees.

Cumulative cost illustration: Funding fees are recurring and cumulative. The following illustrates the potential cumulative cost of funding on a 10,000 USDT long position held for 2 days, assuming a constant funding rate of +0.01% and 8-hour intervals (6 assessments):

After interval 1 (8h): 1.00 USDT | Cumulative: 1.00 USDT

After interval 2 (16h): 1.00 USDT | Cumulative: 2.00 USDT

After interval 3 (24h): 1.00 USDT | Cumulative: 3.00 USDT

After interval 4 (32h): 1.00 USDT | Cumulative: 4.00 USDT

After interval 5 (40h): 1.00 USDT | Cumulative: 5.00 USDT

After interval 6 (48h): 1.00 USDT | Cumulative: 6.00 USDT

Over 2 days, funding fees total 6.00 USDT on a 10,000 USDT position. Funding rates are variable and may be substantially higher than in this example. A position that is profitable based on price movement alone may become unprofitable after accounting for cumulative funding fees.

9.4 Liquidation fees

When a position is automatically liquidated, the following fees apply:

(a) Liquidation taker fee: calculated at the taker fee rate applicable to your current fee tier, applied to the notional value of the liquidated position. This is the same taker rate that applies to ordinary trading.

(b) Liquidation clearance fee: an additional fee to cover market fluctuations, slippage and certain liquidation losses during the liquidation process. It is calculated as:

Liquidation clearance fee = Face value × Contract multiplier × Number of liquidated positions × Mark price × Position tier buffer ratio

The position tier buffer ratio does not exceed 1%. The buffer ratio may vary by position tier.The net proceeds from liquidation fees and liquidation clearance fees are contributed to the Security Fund to provide additional protection for clients. These fees are not revenue to OKX from ordinary trading; they are a cost of the risk management process.

9.5 Other fees

Conversion fees: If you acquire USDT through the fiat-to-crypto conversion or spot trading functionality on the OKX platform, that service is provided by OKX Australia Pty Ltd (a separate entity, see section 5.2) and may be subject to separate conversion fees and spreads. Conversion fees are not a fee for the Products.

Withdrawal fees: If you withdraw USDT or other digital assets from your OKX account, withdrawal fees and blockchain network fees may apply. These are not fees for the Products and are set out in the relevant withdrawal fee schedule on the platform.

Blockchain and network fees: Transactions involving blockchain transfers are subject to network fees determined by blockchain conditions. These fees are not controlled by OKX.

9.6 Lifecycle fee examples

The following examples illustrate the total fee impact over the life of a position. Both examples use illustrative fee rates and are not based on actual rates. Refer to the fee schedule on the Trading Platform for current rates.

Assumptions for both examples: BTC-USDT perpetual, 2x leverage, deposit 5,000 USDT, notional value 10,000 USDT (at BTC-USDT perps contract = 100,000 USDT), taker fee 0.05%, maker fee 0.02%, funding rate +0.01% per 8h interval, position held for 48 hours (6 funding intervals).

Example A: Profitable trade (+5%)

Step 1: Open long (taker) - Fee: 0.05% × 10,000 = 5.00 USDT

Step 2: Hold 48h (6 funding intervals) - Funding: 6 × (10,000 × 0.01%) = 6.00 USDT

Step 3: BTC rises 5% to 105,000. Unrealised P&L = +500 USDT

Step 4: Close (maker) - Fee: 0.02% × 10,500 = 2.10 USDT

Gross P&L: +500.00 USDT

Trading fees: -7.10 USDT

Funding fees: -6.00 USDT

Total fees: -13.10 USDT

Net P&L: +486.90 USDT

Fees reduced gross profit by approximately 2.6%.

Example B: Small loss (-0.5%)

Step 1: Open long (taker) - Fee: 0.05% × 10,000 = 5.00 USDT

Step 2: Hold 48h (6 funding intervals) - Funding: 6 × (10,000 × 0.01%) = 6.00 USDT

Step 3: BTC falls 0.5% to 99,500. Unrealised P&L = -50 USDT

Step 4: Close (maker) - Fee: 0.02% × 9,950 = 1.99 USDT

Market loss: -50.00 USDT

Trading fees: -6.99 USDT

Funding fees: -6.00 USDT

Total fees: -12.99 USDT

Net loss: -62.99 USDT

Fees increased the total loss from 50 USDT to approximately 63 USDT. Fees accounted for approximately 21% of the total loss. On a small adverse price movement, the cumulative effect of trading fees and funding fees can be significant relative to the market loss itself.

9.7 Changes to fees

OKX may change its fee rates and fee structure from time to time in accordance with the Client Agreement. We will give reasonable notice of any material change to fees. You should check the current fee schedule on the Trading Platform before opening or maintaining a position.

10. TAXATION IMPLICATIONS

10.1 General

The following information is a general guide to some of the Australian taxation implications of trading the Products. It is general information only and is not, and should not be taken as, tax advice.

You should obtain independent professional taxation advice before trading the Products.

10.2 Income tax

Gains arising from trading the Products may be assessable income under section 6-5 of the Income Tax Assessment Act 1997 (Cth) (ITAA 97), or under section 15-15 of the ITAA 97 where the gain arises from a profit-making scheme.

Losses arising from trading the Products may be deductible under section 8-1 of the ITAA 97, provided the Products are traded in carrying on a business or for the purpose of producing assessable income.

10.3 Capital gains tax

An OTC derivative is a CGT asset for the purposes of the ITAA 97. A CGT event may occur on the maturity, close-out or other termination of a position under CGT Event C2 (section 104-25 of the ITAA 97).

10.4 GST

Costs associated with trading the Products are likely to constitute a financial supply and accordingly are input-taxed for GST purposes. No GST is expected to be payable. This is consistent with ATO GSTD 2005/3.

10.5 TOFA

The TOFA regime in Division 230 of the ITAA 97 generally does not apply to individuals, but may apply to entities that hold financial arrangements meeting the relevant thresholds.

10.6 Seek independent tax advice

The tax treatment of derivatives referencing crypto-assets is complex and may change. You should obtain independent taxation advice before trading the Products.

11. GENERAL INFORMATION

11.1 Complaints and dispute resolution

If you have a complaint about the Products or our services, you may lodge a complaint by contacting us through the OKX Help Centre, by email or by telephone using the contact details set out in section 1 (Important Information).

Internal dispute resolution

We have an internal dispute resolution process that complies with ASIC Regulatory Guide 271. We will aim to acknowledge your complaint within 1 business day and will endeavour to provide a written response within 30 calendar days.

External dispute resolution

OKX is a member of the Australian Financial Complaints Authority (AFCA). If you are not satisfied with the outcome of our internal complaints process, you may refer your complaint to AFCA.