E-FORM 02742 (10/2019)
RBC Direct Investing Inc. and Royal Bank of Canada are separate corporate entities which are affiliated. RBC Direct Investing Inc. is a wholly owned subsidiary of Royal Bank of Canada and is a Member of
the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. Royal Bank of Canada and certain of its issuers are related to RBC Direct Investing Inc. RBC Direct
Investing Inc. does not provide investment advice or recommendations regarding the purchase or sale of any securities. Investors are responsible for their own investment decisions. RBC Direct Investing
is a business name used by RBC Direct Investing Inc. ® / ™ Trademark(s) of Royal Bank of Canada. RBC and Royal Bank are registered trademarks of Royal Bank of Canada. Used under licence. © Royal Bank
of Canada 2019. All rights reserved.
RBC Direct Investing Inc.
OPTIONS TRADING AND MARGIN AGREEMENT
To: RBC Direct Investing Inc. ("RBC Direct Investing®")
In consideration of RBC Direct Investing opening or maintaining one or more accounts for the
customer executing this Agreement (the "Customer"). The Customer agrees to the following
terms and conditions for the operation of each Account.
1. APPLICABLE BY LAWS, CUSTOMS, ETC.
Each transaction executed for the Account will be subject to, and the customer will abide by
the prevailing by-laws, rules, regulations, policies and customs of the Regulatory Authorities.
2. SETTLEMENT, COMMISSIONS AND INTEREST.
Full and timely settlement will be made of each transaction. The Customer will pay to RBC
Direct Investing commissions and other transaction charges in respect of each transaction
or option exercised (including any transaction pursuant to section 8) and interest, calculated
daily and compounded monthly, on outstanding indebtedness. Such commissions and
other charges shall be at RBC Direct Investing's customary rates in the circumstances or as
negotiated from time to time. The interest rate shall be the interest rate designed from time
to time by RBC Direct Investing to its branches as being its effective rate for determining
interest on debit balances. The Customer waives notices of all changes in such rates.
3. OPERATION OF THE ACCOUNT.
(a) RBC Direct Investing will credit to the Account any interest, dividends or other monies
received in respect of Securities held in the Account and any monies (net of all charges)
received as proceeds from the sale or other disposition of Securities from the Account, and
will debit to the Account any amounts owing, including interest, by the Customer to RBC
Direct Investing pursuant to this Agreement. RBC Direct Investing will maintain a record of
receipts and deliveries of Securities and the Customer's resulting positions in the Account.
(b) For the purpose of this Agreement "indebtedness" at any time means the indebtedness
of the Customer to RBC Direct Investing represented by the debit balance, if any, of the
Account at the time.
4. PAYMENT OF INDEBTEDNESS.
The Customer will promptly pay indebtedness when due except to the extent covered by a
RBC Direct Investing will open or maintain the Account and grant a margin facility to the
Customer provided that RBC Direct Investing may, without notice, at any time and from time
(a) reduce or cancel any margin facility made available to the Customer or refuse to grant
any additional margin facility to the Customer; or
(b) require the Customer to provide margin in addition to the margin requirement of the
The Customer acknowledges that for certain option strategies producing a credit, the
Regulatory Authorities may require significant additional margin. The customer will provide
RBC Direct Investing with any margin which is requested by RBC Direct Investing and will
promptly pay any Indebtedness due as a result of any reduction or cancellation of any
6. PLEDGE OF SECURITIES.
As continuing collateral security for the payment of any Indebtedness, the customer hereby
pledges to RBC Direct Investing all of the Customer's Securities which may now or hereafter
be held by RBC Direct Investing, whether or not such Indebtedness relates to the Securities
7. USE OF COLLATERAL BY RBC DIRECT INVESTING.
So long as any indebtedness remains unpaid, RBC Direct Investing is hereby authorized to
the extent permitted by law, without notice, to use at any time and from time to time the
Customer's Securities in the conduct of RBC Direct Investing's business, including the right
(a) combine any of the Customer's Securities with the property of RBC Direct Investing or
other customers or both;
(b) pledge any of the Customer's Securities which are held in RBC Direct Investing's
possession as security for its own indebtedness;
(c) loan any of the Customer's Securities to RBC Direct Investing for its own purposes; or
(d) use any of the Customer's Securities for making delivery against a sale, whether a short
sale or otherwise and whether such sale is for the Account or the account of any other RBC
Direct Investing's customers.
8. ELIMINATION OR REDUCTION OF INDEBTEDNESS BY RBC DIRECT INVESTING IF:
(a) the Customer fails to pay any Indebtedness when due;
(b) RBC Direct Investing deems the margin held by it to be insufficient for its protection;
(c) On or before any settlement date the Customer fails to provide to RBC Direct Investing
any required Securities or certificates in acceptable delivery form; or
(d) The Customer fails to comply with any other requirement contained in this Agreement;
then, in addition to any other right or remedy to which RBC Direct Investing is entitled, RBC
Direct Investing may at any time and from time to time without notice or demand to the
(e) Apply monies held to the credit of the Customer in any other account with RBC Direct
Investing to eliminate or reduce Indebtedness;
(f) Sell, contract to sell or otherwise dispose of any or all of the Securities held by RBC Direct
Investing for the Customer and apply the net proceeds therefrom to eliminate or reduce
(g) Purchase or borrow any Securities necessary to cover short sales or any other sales made
on the Customer's behalf in respect of which delivery or certificates in
delivery form has not been made; or
(h) Cancel any outstanding orders.
Such rights may be exercised separately, successively or concurrently. RBC Direct Investing
shall not be required by this Agreement to exercise any such rights nor shall it be required to
exercise any right prior to exercising any other right. The failure to exercise any or all of such
rights of the granting of any indulgence shall not in any way limit, reduce or discharge any
Indebtedness or part thereof. Any such sales or purchases for the Account may be made upon
any exchange or market or at a public or private sale upon such terms and in such manner as
RBC Direct Investing deems advisable. If demand is made or notice given to the Customer by
RBC Direct Investing, it shall not constitute a waiver of any of RBC Direct Investing's rights to
act hereunder without demand or notice. Any and all expenses (including any legal expenses)
reasonably incurred by RBC Direct Investing, in connection with exercising any right pursuant
to this section 8 may be charged to the Account. The Customer acknowledges that the
Customer shall remain liable to RBC Direct Investing for any deficiency remaining following
the exercising by RBC Direct Investing of any or all of the foregoing rights and that the rights
which RBC Direct Investing is entitled to exercise pursuant to this section are reasonable and
necessary for its protection having regard to the nature of securities markets, including in
particular, their volatility.
9. OPTION TRADING.
With respect to any trading for the Account in options:
(a) Rights of RBC Direct Investing - RBC Direct Investing may from time to time:
(i) reject any order placed by the Customer
(ii) act through its market maker or options attorney as principal on the other side of any
transaction executed for the Customer;
(iii) require any transaction to be on a cash-only basis, particularly during the last 10 days
prior to expiry of an option;
(iv) limit or restrict short positions of, or short sales by, the Customer;
(v) limit or restrict the timing by which options orders or exercise instructions must be
(vi) disclose the Customer's trading and positions to any responsible exchange or
(b) Customer Obligations. The Customer will:
(i) whether acting alone or in concert with others, comply with the position and exercise
limits set by any relevant exchange or clearing corporation; and
(ii) give RBC Direct Investing timely instructions regarding the exercise or disposition of
any option position.
(c) Amendments to Rules. The customer acknowledges that rules may be enacted, amended
or repealed by any relevant exchange or clearing corporation which will affect existing
positions or subsequent transactions.
(d) Exercise Assignment Notices. The Customer acknowledges that exercise assignment
notices are allocated by the relevant clearing corporation at any time during the day. RBC
Direct Investing will allocate such notices when received on a "first in, first out" basis unless
the customer is notified otherwise by prior written notice. RBC Direct Investing is not
responsible for any delay with respect to the assignment by the clearing corporation or the
receipt by RBC Direct Investing of such notices. The Customer confirms that the Customer will
accept an allocation on this basis.
(e) Liability of RBC Direct Investing. Errors or omissions with respect to any transaction for the
Account which are caused by RBC Direct Investing will be adjusted by RBC Direct Investing.
RBC Direct Investing will not be liable to the Customer in any way for errors or omissions
caused by persons, or by conditions, over which RBC Direct Investing has no control.
(f) Instructions and Absence of Instructions. The accountholder will instruct RBC Direct
Investing regarding any option transaction by no later than 3:30 p.m. Eastern time on the last
trading day of the option. If the last day of trading of the option occurs on a day where the
market closes early, the accountholder will instruct RBC Direct Investing by no later than thirty
(30) minutes before the market closes.
If the accountholder fails to give RBC Direct Investing timely instruction, then RBC Direct
Investing may take any action with respect to an option that it in its sole discretion
determines should be taken, including but not limited to: (i) exercising, buying or selling any
valuable option on behalf of the accountholder in which case the accountholder will pay any
resulting transaction costs; and (ii) exercising for the account and risk of the accountholder,
buying, selling or closing out any expiring valuable option.
(g) Writing Covered Options. If the Customer is authorized to write (sell) covered Call options,
then the Customer must have the underlying Securities covered by any such option in the
Account, or an acceptable escrow receipt made available to RBC Direct Investing evidencing
ownership of such Securities and their availability to RBC Direct Investing upon exercise of the
option, at the time of writing such options. The Customer will not sell or withdraw from the
Account such Securities or any Securities accruing thereto during the term of such options
and acknowledges that RBC Direct Investing may prohibit the withdrawal from the Account
of any cash dividends or other cash distributions accruing thereon during the term of such
10. HOLDING AND RETURN OF SECURITIES.
RBC Direct Investing may hold the Customer's Securities at its head office or any of its
branches or at any other location where it is customary for RBC Direct Investing to keep its
Securities and RBC Direct Investing's responsibilities to the Customer for so holding the
Customer's Securities shall be limited to the same degree of care exercised by RBC Direct
Investing in the custody of its own Securities. Certificates for Securities for the same issue and
for the same aggregate amounts may be delivered to the Customer in lieu of those originally
deposited by the Customer.
11. FREE CREDIT BALANCES
Any monies held by RBC Direct Investing from time to time to the Customer's credit are
payable on demand. Except to the extent required by law, such monies need not be
segregated and may be used by RBC Direct Investing in the ordinary conduct of its business.
The Customer acknowledges that the relationship of the Customer and RBC Direct Investing
with respect to such monies is one of debtor and creditor only.
READ AND KEEP FOR YOUR RECORDS