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The material risks of a swap include market, credit, liquidity, foreign currency, legal and operational risks. Such risks start from the time at which you enter into the swap transaction with us and may lead to changes in financial outcomes that are unfavorable to you.
The material risks associated with swap transactions are described in detail in the ISDA General Disclosure Statement and the applicable ISDA Product Annexes, which are incorporated by reference and form part of the information provided to you in connection with swap transactions with CBA.
A full description of the material risks relevant to you are described in the following documents:
1.1 General risks
1.2 Commodity risks
1.3 Credit risks
1.4 Equity risks
In addition to these risks, additional disclosures further detailing specific risks of a swap may also be disclosed to you by other means (for example, in a term sheet or other similar pre-trade document) prior to you entering into the swap with us.
The material characteristics of a swap include:
Information regarding the general characteristics of swaps and the typical features of derivative transactions by asset class is provided in the ISDA General Disclosure Statement and the applicable ISDA Product Annexes, which are incorporated by reference.
The material economic terms will be disclosed to you prior to you entering into a swap transaction with us. Typical material economic terms applicable for a variety of derivative transactions can be found in the following documents:
Depending on how you elected to receive this information when you adhered to the International Swaps and Derivatives Association, Inc., (ISDA) August 2012 Dodd-Frank Protocol (DF Protocol), then this information will be disclosed to you either verbally (followed by a written confirmation post-trade) or in writing in the form of a term sheet (or other similar pre-trade document) depending on your elections and applicable regulatory requirements, at a reasonable time prior to your trade.
You should review carefully all transaction-specific disclosures and documentation applicable to each swap transaction.
Information regarding conflicts of interest and material incentives associated with swap transactions is provided in the ISDA General Disclosure Statement, which is incorporated by reference.
From time to time, CBA may use third-party agents to market or solicit counterparties or transactions. Such agents may receive remuneration from CBA, including:
These arrangements may give rise to potential conflicts of interest.
If you enter into a cleared swap with us, then you may request the daily mark relating to the swap from the appropriate Derivatives Clearing Organisation (DCO). For uncleared swaps, we will provide you with a daily mark as required under applicable regulations. The daily mark represents an estimate of the value of the swap based on our valuation methodologies and assumptions, which may change over time. The daily mark is not necessarily the price at which either party would agree to terminate, assign, or replace the swap, and may differ from the valuation used for margining or internal accounting purposes.
With respect to swaps executed by you with Commonwealth Bank, we are not required to provide a pre-trade mid-market mark (‘DF Mid’) prior to trade execution. However, Commonwealth Bank will continue to provide a pre-trade mid-market estimates as a courtesy or upon request.
Any 'DF Mid' that we may provide to you is an indicative mid-market estimate and will not include amounts of profit, credit reserve, hedging funding, liquidity or any other costs and adjustments. Calculations are made in good faith based on numerous assumptions and information obtained from relevant internal and external sources. We believe any such sources to be reliable but makes no representations or warranties with respect to the accuracy, liability or completeness of such data or information or the resulting price.
We may provide the 'DF Mid' to you either: (1) in writing via electronic email or any other means of electronic communication notified by us to you to the email address that you have provided, or (2) orally over the phone or any other similar communication device, (provided that you have either consented in writing or made the relevant election under ISDA August 2012 DF Protocol and Questionnaire to receive oral pre-trade mid-market mark).
Please also note that any 'DF Mid' we provide to you may not necessarily, and would often be expected not to be a price at which we or any third party would agree to enter into new transactions, or terminate or unwind transactions. A swap’s value may not be readily observable in the market and is therefore often subjective, and based on numerous assumptions and methodologies of each market participant. Accordingly, our 'DF Mid' may vary from those provided by other market participants for a swap. You may wish to seek representative quotations from other participants in the relevant market to compare prices or to determine the intrinsic or current market value of a particular swap.
Certain swaps may be subject to mandatory clearing requirements under U.S. law, and in other cases counterparties may have the right to elect clearing and to select the derivatives clearing organisation on which a swap is cleared.
Information regarding mandatory clearing, the right to elect clearing, the right to select a clearing organisation, and the end-user exception is provided in the ISDA General Disclosure Statement, including the Clearing section, which is incorporated by reference and provided to counterparties in connection with their swap trading relationship with CBA.
For uncleared Transactions, subject to the terms of any agreement between us and to applicable laws, you may have the right to require segregation of certain collateral that you provide to us to margin, guarantee, or secure your obligations, other than with respect to variation margin and provided that the property is of a type that may be held by a third party custodian.
Information regarding this right is provided in the ISDA General Disclosure Statement, which is incorporated by reference.
If you wish to request a segregation of certain collateral, please contact your current CBA relationship manager.
If you are an employee benefit plan or other entity that is eligible to elect Special Entity status under applicable CFTC rules, you may do so by notifying CBA in writing.
Information regarding Special Entities is provided in the ISDA General Disclosure Statement, which is incorporated by reference.
If you wish to elect to be treated as a Special Entity, please contact your current CBA relationship manager.
Where CBA acts as the reporting counterparty for a swap transaction, we will report the transaction to the applicable swap data repository in accordance with U.S. regulatory requirements.
Currently, swap transactions subject to U.S. reporting requirements are reported to DTCC Data Repository (U.S.) LLC.
Please contact your relationship manager or the manager of the department that handled the matter and explain the problem.
Our staff will review the situation and, if possible, resolve it immediately. If the matter has not been resolved to your satisfaction, please contact our Customer Relations team by:
Or you can write to us at:
Customer Relations
Commonwealth Bank Group
GPO Box 41
Sydney NSW 2001
Or you can write to us at:
Commonwealth Bank
PO Box 2719
GPO Sydney NSW 1155
This risk disclosure is provided for information purposes only. It is not intended to be a comprehensive description of all risks or regulatory requirements applicable to swap transactions and/or the Dodd Frank Act.
CBA is not acting as an advisor or fiduciary in connection with the provision of this information. You should obtain your own independent legal, financial, tax and other professional advice as you consider appropriate.
