Target Market Determination - OTC Perpetual Derivatives

1. INTRODUCTION AND PURPOSE OF THE TMD

OKX Australia Financial Pty Ltd (referred to as "OKX", "us", "our" or "we") is authorised by the Australian Securities and Investments Commission (ASIC) to issue and deal in over-the-counter (OTC) derivatives to retail and wholesale clients.

This Target Market Determination (TMD) is prepared for the purposes of the design and distribution obligations set out in Part 7.8A of the Corporations Act 2001 (Cth) and applies to the issue and distribution of Crypto Perpetuals, Stock Perpetuals and Commodity Perpetuals by OKX to retail clients.

This document describes the class of consumers for whom our OTC perpetual derivative products are likely to be appropriate (the target market). It is not a Product Disclosure Statement (PDS), and does not take into account any particular client’s objectives, financial situation or needs. Clients should read the PDS, Financial Services Guide and OKX Terms of Service – Australia at okx.com/en-au as well as any other relevant OKX documents to ensure that they fully understand the risks involved and consider seeking independent advice before deciding to trade these products with us.

2. PRODUCT OVERVIEW

This section provides an overview of the key attributes and risks of the OTC derivative products covered by this TMD.

The products covered by this TMD are Crypto Perpetuals, Stock Perpetuals and Commodity Perpetuals (the Products), which may be made available for trading on the Trading Platform from time to time. The specific markets currently available for trading are displayed on the Trading Platform.

Crypto Perpetuals reference the price of a crypto-asset. Stock Perpetuals reference an index designed to provide synthetic exposure to the economic value of a share, exchange traded fund interest or equity index. Commodity Perpetuals reference an index designed to provide synthetic exposure to the economic value of gold or another commodity. The Products do not have an expiry date and allow clients to maintain positions for an indefinite period, subject to margin requirements.

The Products use a funding rate mechanism under which periodic payments may be exchanged between long and short positions. This mechanism is designed to help keep the contract price aligned with the relevant underlying market.

The Products involve leverage, are complex and may be highly volatile. They are high-risk products and are suitable only for clients with a high tolerance for investment risk and the financial capacity to bear a total loss of their invested capital. All margin, profits, losses and funding payments are denominated and settled in USDT. The Products carry the risk of significant loss due to volatility and margin requirements. For further details in relation to the risks associated with the Products, refer to our PDS.

3. TARGET MARKET FOR OTC PERPETUAL DERIVATIVES

Target Market

The Products described in this TMD are likely to be appropriate for retail clients who satisfy each of the criteria in the following table:

Retail clients who satisfy the criteria in the table above and who likely have one or more of the following objectives are in the target market for the Products:

• Speculative Trading: Using leverage (up to 2:1) to seek higher returns with corresponding risk via price movements of the relevant underlying asset, instrument or index.

• Short-Term Exposure: Gaining short-term exposure to rising or falling markets where ownership or delivery of the relevant underlying asset or instrument is not desired or is not otherwise readily available.

• Hedging: Mitigating potential future losses or protecting previous gains from holdings or exposures relating to the relevant underlying asset, instrument or index and/or lowering the cost of acquiring economic exposure.

Clients who are not suitable to acquire the Products

The Products issued by OKX are unsuitable for and must not be distributed to retail clients who do not meet each of the criteria in the table above or fall into any of the following categories:

• Financial capacity and situation

  • Clients who solely derive their income from pension, social benefits, and/or short term consumer credit.

  • Clients who are retired and may not have sufficient sources of income or savings to facilitate trading whilst maintaining a modest lifestyle in retirement.

  • Clients who are in financial hardship or going through bankruptcy.

  • Clients who are unemployed or recently experienced job loss and are unable to meet their day-to-day financial needs.

• Personal circumstances and vulnerability

  • Clients who are currently experiencing or recovering from mental illness or psychological conditions that may impair their capacity to make sound financial decisions.

  • Clients who are currently experiencing or recovering from alcohol or drug addiction.

  • Clients who are currently or have recently been victims of domestic, family, or financial abuse.

  • Clients who are experiencing elder abuse or undue influence from a third party in relation to their financial decisions.

• Objectives and investment strategy

  • Clients who have longer term investment timeframes.

  • Clients whose investment objective is targeted for capital preservation or appreciation.

  • Clients who are seeking guaranteed capital protection or stability and regular or predictable returns.

  • Clients who invest in the Products for standalone or core investment purposes.

• Knowledge, competence and capacity

  • Clients who have low levels of financial literacy.

  • Clients who lack the capacity to understand the risks of the Products.
    

4. DISTRIBUTION CONDITIONS AND RESTRICTIONS

OKX and any distributor must take reasonable steps to ensure that the distribution of the Products is limited to the defined target market. This is achieved through robust controls implemented across the distribution chain:

A. Client Onboarding Controls

All prospective retail clients must pass the following mandatory filters during the application process:

• Age and Identity Verification: Applicants must be confirmed to be over the age of 18.

• Suitability Assessment: Clients must successfully complete the OKX Suitability Questionnaire, which assesses the client’s financial situation, investment objectives, and risk tolerance to determine whether the product is appropriate for the client’s circumstances. If a client fails the suitability assessment, applicable lock-out periods will apply before they may re-apply for derivatives trading access.

• Knowledge Assessment: Clients must successfully complete the OKX Knowledge Test demonstrating knowledge of leverage, margin, and the risk of total loss associated with the Products by achieving the passing score specified in the applicable Knowledge Test procedures. If a client fails the knowledge assessment, applicable lock-out periods will apply before they may re-attempt the assessment.

Access to the Products will not be enabled unless both the Suitability Questionnaire and the Knowledge Test are successfully completed.

b. Third-Party Distribution

Any third party authorised to promote or distribute the Products must undergo due diligence to ensure their business and marketing strategy align with this TMD.

Authorised distributors may engage in marketing, promotion or referral activities only. Distributors must direct prospective clients to complete the OKX onboarding process, and must not provide access to the Products or onboard clients directly.

All retail clients must complete the OKX Suitability Questionnaire and Knowledge Test through the OKX platform before they are permitted to access the Products.

c. Staff Training

OKX will ensure that all employees involved in the promotion, distribution, client onboarding, or provision of general advice in relation to the Products receive appropriate training on this Target Market Determination. The training will cover the target market and negative target market criteria described in this TMD, the distribution conditions applicable to the the Products, and the requirement that all marketing and client interactions remain consistent with the defined target market.

Employees must also be trained on the distinction between general advice and personal advice, including the prohibition on providing personal advice unless appropriately authorised to do so. This is intended to ensure that staff interactions with clients do not stray into personal advice when discussing high-risk derivative products.

Training must be completed before employees undertake any relevant activities and will be refreshed annually to ensure continued compliance with this TMD.

d. Marketing Strategy controls

All marketing and promotional activities relating to the Products will be subject to appropriate internal review prior to publication or distribution. This may include online advertisements, email campaigns, social media content, and other promotional materials, to ensure that marketing communications are consistent with the target market described in this TMD and applicable internal policies.

e. Ongoing Monitoring

OKX will take reasonable steps to monitor the ongoing distribution and use of the Products to assess whether the they continues to be distributed consistently with this TMD. This monitoring may include reviewing relevant data and indicators relating to client onboarding outcomes, trading activity and complaints, including by product class where relevant, to identify any patterns suggesting that the Products may be reaching consumers outside the intended target market.

5. REVIEW TRIGGERS

The TMD will be reviewed at least every 12 months or more frequently if any of the following review triggers occur.

a. Review Triggers

A review will occur within ten (10) business days of OKX becoming aware of an event or circumstance that reasonably suggests the TMD is no longer appropriate, including:

• where we become aware of any significant issuance or distribution of the Products to retail clients outside the defined target market.

• receipt of an unusually large volume of complaints relating to derivatives from clients who may fall outside the TMD.

• a material change to any Product or product class as a result of new or amended functionality, whereby the key attributes of the Product or product class are no longer consistent with the likely objectives, financial situation, and needs of clients in the target market.;

• material changes to law or regulation affecting the Products;

• ASIC or another regulator issues an adverse finding, a product intervention order, or adverse media coverage related to the product;

• any other event or circumstance that would materially change a factor taken into account in making this TMD for OTC PerpetualDerivatives .
  

b. Distribution Reporting Requirements

All distributors (internal and external) must provide the following information to OKX Australia Financial Pty Ltd as the issuer, broken down by product class where relevant: