Terms and Conditions – Rockstand Investments Market Making Services

Introduction and Scope

Rockstand Investments Limited ("Rockstand") is a financial institution duly organized under the laws of Kenya and licensed by the Capital Markets Authority ("CMA") as an Authorised Securities Dealer, authorized to deal in fixed income securities. Rockstand has been designated (or is seeking designation) as a Market Maker in Government of Kenya Treasury bonds in the secondary market.

These Terms and Conditions ("Terms") govern Rockstand's market-making services in Government bonds within Kenya, setting out the obligations of Rockstand and the rights and disclosures afforded to its counterparties and clients ("Clients"). The Terms incorporate applicable provisions from the Central Bank of Kenya ("CBK"), the Nairobi Securities Exchange ("NSE"), the CMA, and relevant global best practices for market makers.

All Clients transacting or interacting with Rockstand in its capacity as a market maker are deemed to have accepted these Terms. These Terms are intended to be read in conjunction with, and subject to, any mandatory provisions of Kenyan law and regulatory requirements. In the event of any conflict between these Terms and any applicable law or regulation, the provisions of the law or regulation shall prevail.

1. Regulatory Status and Authorization

1.1 Licensing and Qualification:

Rockstand affirms that it meets all eligibility criteria to act as a market maker in Kenya. Rockstand is a duly authorized institution under Kenyan law (including being licensed under the Banking Act, Cap 48B, or other applicable legislation) as required by CBK's guidelines. Rockstand maintains sufficient capital and liquidity resources to fulfill all market-making obligations, as determined by regulatory requirements.

1.2 Regulatory Oversight:

Rockstand holds an Authorised Securities Dealer license issued by the CMA, permitting it to deal in Government bonds (and other fixed income securities) both on exchange and over-the-counter ("OTC"). Rockstand's key personnel engaged in trading are fit and proper, adequately qualified, and possess all necessary certifications or licenses (including the CMA-authorized securities dealer certifications) to carry out market-making functions[3]. Rockstand operates under the oversight of the CBK (as the regulator for the government securities market) and the CMA (as the capital markets regulator), and it will at all times comply with the directives, rules, and guidelines of these authorities.

1.3 Market Scope:

Rockstand's market making activities are currently limited to the Kenyan market. The firm will act as market maker only in Government of Kenya Treasury bonds (including any designated benchmark issues or on-the-run issues) as permitted by the regulators. These Terms do not extend to any instruments or markets outside Kenya. Should Rockstand decide to expand its market-making services to other instruments or jurisdictions in the future, it will seek appropriate regulatory approvals and update these Terms accordingly.

2. Definitions (as used in these Terms)

For purposes of these Terms, the following definitions apply:

• "Government Bonds" means the Treasury bonds or other debt securities issued by the Government of Kenya that Rockstand makes a market in (whether listed on an exchange or traded OTC).
• "Market Maker" means a financial firm or person that continuously stands ready to buy and sell certain securities by posting two-way (buy and sell) price quotations, thereby providing liquidity to the market[4]. Under these Terms, Rockstand acts as a Market Maker in the designated Government Bonds.
• "Client" or "Counterparty" means any investor, trader, broker, or other party that transacts with Rockstand or seeks quotes from Rockstand in the course of Rockstand's market-making activities.
• "Applicable Regulations" means all laws, regulations, rules, guidelines, and regulatory directives applicable to Rockstand's activities as a market maker in Kenya. This includes, without limitation, the Capital Markets Act (Cap 485A) and regulations thereunder, CBK guidelines for OTC Government securities market, NSE trading rules (to the extent applicable), and any other relevant regulatory requirements in Kenya.
• "Authorized Securities Dealer" is a license category under the CMA regulations for entities dealing in fixed income securities. Rockstand's status as an Authorised Securities Dealer means it can trade fixed income securities (including Government Bonds) on its own account or on behalf of clients, whether on an exchange or OTC.

(Any other capitalized terms used herein and not defined shall have the meaning assigned to them in applicable law or market convention.)

3. Market Making Obligations of Rockstand

Rockstand undertakes the following core obligations in its role as a Market Maker, in line with regulatory provisions and global best practices:

• Liquidity Provision: Rockstand shall maintain a continuous two-way market for designated Government Bonds by consistently providing firm price quotations for both buying and selling. This means Rockstand will quote both a bid price (at which it offers to buy the bond) and an ask price (at which it offers to sell the bond), for the relevant bonds, during active trading hours.
• Quotation Size and Spread: Each two-way quote provided by Rockstand will be for a minimum lot size as stipulated by the CBK's market-making guidelines (currently Kenyan Shillings 20,000,000 nominal value, with any incremental amounts in lots of KES 50,000). Rockstand shall adhere to any maximum bid-ask spread requirements imposed by regulators; under current draft rules, the bid-ask spread for market makers in government bonds is capped at 25 basis points (0.25%). Rockstand will endeavor to keep its bid-ask spreads tight and competitive, in line with prevailing market conditions and regulatory standards, to ensure Clients receive fair pricing.

• Trading Hours: Rockstand will actively provide two-way quotations during the officially designated trading hours for the OTC bond market. As per the pilot program guidelines, Rockstand will quote prices for at least five (5) hours daily, between 9:30 AM and 2:30 PM East Africa Time on business days. Rockstand may extend quote availability beyond these hours at its discretion, but outside of the core hours liquidity may be subject to market conditions. During the specified hours, Rockstand will use all reasonable efforts to maintain continuous quotes for the agreed securities (barring exceptional market disruptions or operational issues as covered elsewhere in these Terms).
• Firm Quotes and Execution: Quotes provided by Rockstand are generally firm and executable up to the quoted size. Upon a Client's acceptance of a Rockstand quote (or order at Rockstand's quoted price), Rockstand will honor the price up to the quoted volume, subject to confirmation and final agreement on the trade terms. However, Rockstand reserves the right to withdraw or revise a quote prior to execution in the event of rapid market movement, technical error, or other conditions that materially affect the quote's fairness or accuracy. In any event, once a trade is agreed and confirmed, Rockstand is bound to settle the trade at the agreed price and size, in accordance with these Terms and applicable market rules.
• Fair and Orderly Market Commitments: In performing its market-making activities, Rockstand shall maintain a fair and orderly market in the bonds it covers. Rockstand's trading for its own account will be conducted in a reasonable and principled manner, consistent with just and equitable principles of trading, and not detrimental to the integrity of the market. Rockstand will refrain from any conduct that abuses its position as a liquidity provider, such as artificially manipulating prices or spreads. All actions taken as a Market Maker will aim to enhance market liquidity, transparency, and efficiency, in line with the objectives of the CBK's market-maker program.

4. Pricing and Disclosure

• Methodology: Rockstand determines the prices (bid and ask) it quotes based on prevailing market conditions, including, but not limited to, current interest rates, yield curves, demand and supply for the specific bond, and overall market liquidity. Rockstand may also use pricing data from trading platforms (such as Bloomberg E-Bond or Refinitiv) and any available exchange or OTC market data to inform its quotations. All pricing will reflect honest market-driven valuations; Rockstand will not quote fictitious or knowingly mispriced quotes.
• Profit from Spread: Clients acknowledge that Rockstand, as a Market Maker, expects to earn a profit through the bid-ask spread on trades. The difference between the price at which Rockstand buys a bond and the price at which it sells (the spread) is Rockstand's primary compensation for providing continuous liquidity. This spread is inherently included in the quoted prices and is not a separate fee. Rockstand warrants that its spreads will abide by regulatory limits (as noted in Section 3) and will be kept reasonable and competitive. Any applicable brokerage fees, commissions, or transaction levies (for example, if a trade is executed through an exchange or incurs statutory charges) will be disclosed to the Client and, where appropriate, added to the transaction cost as per standard market practice.
• Indicative vs. Firm Quotes: In some instances, Rockstand may provide indicative quotes (for example, outside of core trading hours or for informational purposes). Indicative quotes are not firm and are provided for guidance only; they do not

constitute an offer to trade at those levels. Rockstand will explicitly identify a quote as "indicative" if it is not intended to be immediately tradeable. All firm quotes from Rockstand (during market hours or as otherwise communicated to the Client) can be relied upon for execution up to the quoted size, subject to prompt acceptance by the Client. Once a Client accepts a firm quote within any stated validity period, Rockstand and the Client shall be legally bound to complete the transaction on the agreed terms, barring failure of a condition beyond a party's control (as addressed in Section 9, Force Majeure, below).

• Transparency and Information: Upon execution of a trade, Rockstand will provide the Client with a confirmation detailing the transaction price, volume, settlement date, and any other key details, in accordance with regulatory requirements and market practice. Rockstand will also, as required by the CMA and other regulators, report the details of the trade to the appropriate systems or authorities (such as the CBK's reporting systems, if any, or any trade repository mandated for the OTC market) to ensure post-trade transparency in line with market regulations. However, Rockstand will maintain appropriate confidentiality of client identities and trade details, disclosing such information only to the extent required by law or regulation (see also Section 8 on Confidentiality).

5. Trading and Settlement

• Settlement Cycle: Trades executed with Rockstand shall settle in accordance with the standard settlement cycle for Government bond transactions in Kenya (currently T+0/1/2/3 to be specified as per market convention, e.g., T+1 or T+2, meaning trade date plus 1 or 2 business days, unless otherwise agreed). Settlement will occur through the designated central securities depository or registry for Government bonds (e.g., the CBK's Central Securities Depository (CSD), currently known as DhowCSD, or any successor system), or via any other mechanism prescribed by the CBK for OTC bond settlement. Both Rockstand and the Client must have the necessary accounts and arrangements in place to facilitate timely settlement (including CSD accounts and cash payment arrangements through the Kenya Electronic Payment and Settlement System or other authorized payment systems).
• Settlement Finality: Both Rockstand and the Client (as parties to each bond transaction) are obligated to ensure settlement finality, meaning that each party will deliver the required securities or funds on the settlement date as required to complete the transaction. In the event that a settlement failure occurs – for example, if either party fails to deliver the bonds or the purchase price at the agreed time – the failing party shall rectify the failure as soon as possible. Interest on Fails: If a transaction fails to settle on time due to the default or inability of one party (e.g., lack of available security or funds), the defaulting party may be liable to pay compensation (such as interest on the failed amount) to the non-defaulting party, as per market convention or as mutually agreed in the trade confirmation. In the absence of a specific agreement, the compensation shall be determined in accordance with prevailing market practice in Kenya's fixed income market.

• Risk of Loss: All trading and investment in Government bonds carries inherent risks, including but not limited to interest rate risk, credit risk, and market liquidity risk. While Government bonds are generally considered low-risk investments (especially in terms of credit risk, as they are backed by the Government of Kenya), their market prices can fluctuate due to changes in interest rates and other market factors. Clients acknowledge that they are solely responsible for their investment decisions and for understanding the risks associated with trading in Government bonds. Rockstand does not provide investment advice or guarantee any investment returns. Clients should seek independent financial advice if they are uncertain about the risks or suitability of bond investments.
• Dispute Resolution: In the event of any dispute or disagreement arising from a trade or these Terms, the parties shall first seek to resolve the matter amicably through good faith negotiations. If the dispute cannot be resolved within 30 days, the parties may refer the matter to the Capital Markets Tribunal (if the dispute falls within its jurisdiction) or to the courts of Kenya, which shall have exclusive jurisdiction. Alternatively, the parties may agree to submit the dispute to arbitration in Nairobi in accordance with the Arbitration Act of Kenya (or any successor legislation). Any legal proceedings or arbitration shall be conducted in the English language.

6. Client Obligations and Representations

By engaging with Rockstand as a Market Maker, each Client represents and warrants the following:

• The Client is duly authorized and has the legal capacity to enter into bond transactions and to be bound by these Terms.
• The Client has obtained all necessary internal and external approvals (if applicable) to trade in Government bonds and to transact with Rockstand.
• The Client has the financial and operational capability to settle the trades it enters into (i.e., to pay for bonds purchased or to deliver bonds sold, as the case may be) on the agreed settlement date.
• The Client is acting as principal (for its own account) in the transaction, unless it has explicitly disclosed to Rockstand that it is acting as an agent for a disclosed or undisclosed principal (and in such case, the Client warrants that it has due authority to bind that principal).
• The Client is in compliance with all applicable laws and regulations (including tax laws, anti-money laundering regulations, and any restrictions on foreign investment if the Client is a non-resident) in relation to its trading activities.
• The Client acknowledges that Rockstand, as a Market Maker, is acting in a principal capacity (trading for its own account) and not as the Client's agent or fiduciary (unless otherwise expressly agreed in writing for specific services). Rockstand's role is to provide liquidity and two-way pricing; it does not owe the Client any advisory duty beyond the obligations set out in these Terms and under applicable regulations.

7. Confidentiality and Data Protection

• Confidentiality: Rockstand will treat all non-public information received from a Client (including trade details, identity, and financial information) as confidential, and will not disclose such information to any third party except: (a) as required by law or regulation (including reporting to regulators or trade repositories); (b) to its affiliates, auditors, legal advisors, or other service providers who need to know the information for the purpose of providing services to Rockstand (and who are themselves bound by confidentiality obligations); or (c) with the Client's prior written consent.
• Data Protection: Rockstand will collect, process, and store Client information in accordance with the Data Protection Act, 2019 of Kenya and any other applicable data protection laws. Rockstand's data collection and processing activities are necessary for the performance of its contractual obligations (e.g., to execute and settle trades), to comply with legal obligations (e.g., anti-money laundering checks), and for its legitimate business interests (e.g., risk management and business development). Clients have the right to access, correct, or request deletion of their personal data held by Rockstand, subject to any legal or regulatory requirements for data retention. For more details, please refer to Rockstand's Privacy Policy (available on request or on its website).

8. Limitation of Liability and Indemnity

• Limitation: To the fullest extent permitted by law, Rockstand's total liability to a Client for any loss or damage arising out of or in connection with these Terms or any transaction (whether in contract, tort, or otherwise) shall not exceed the total value of the specific transaction that gave rise to the claim, or Kenyan Shillings 5,000,000, whichever is lower. Rockstand shall not be liable for any indirect, consequential, special, or punitive damages (including loss of profits or opportunity) arising from its market-making activities, even if Rockstand has been advised of the possibility of such damages.
• Indemnity: The Client agrees to indemnify and hold harmless Rockstand, its directors, employees, and agents from and against any and all claims, losses, liabilities, costs, and expenses (including reasonable legal fees) arising from the Client's breach of these Terms, violation of any law or regulation, or any negligent or wrongful act or omission by the Client in connection with transactions conducted with Rockstand.

9. Force Majeure and Market Disruption

Rockstand shall not be liable for any failure or delay in performing its obligations under these Terms if such failure or delay is due to circumstances beyond its reasonable control, including but not limited to: acts of God, war, terrorism, civil unrest, labor disputes, exchange or market disruptions, suspension of trading, failure of any trading or settlement system, power or communications failure, cyber-attacks, or any action taken by a governmental or regulatory authority. In such events, Rockstand may, at its discretion, suspend its market-making activities or adjust its quotes without liability to Clients.

10. Amendments and Termination

• Amendments: Rockstand may amend these Terms from time to time to reflect changes in law, regulation, market practice, or its business operations. Rockstand will provide Clients with notice of any material changes to these Terms (by email, posting on its website, or other reasonable means) at least 30 days before the changes take effect. Continued use of Rockstand's market-making services after the effective date of the changes constitutes acceptance of the amended Terms.
• Termination: These Terms shall remain in effect until terminated by either party upon 30 days' written notice to the other party. Termination of these Terms will not affect any outstanding transactions or rights and obligations that have accrued prior to termination. Sections relating to confidentiality, limitation of liability, indemnity, and dispute resolution shall survive termination of these Terms.

11. Governing Law and Jurisdiction

These Terms and any non-contractual obligations arising out of or in connection with them shall be governed by and construed in accordance with the laws of Kenya. The courts of Kenya shall have exclusive jurisdiction to settle any dispute or claim arising out of or in connection with these Terms or their subject matter.

12. Miscellaneous

• Entire Agreement: These Terms constitute the entire agreement between the parties regarding Rockstand's market-making services and supersede any prior agreements, understandings, or representations (oral or written) on the same subject matter.
• Severability: If any provision of these Terms is found to be invalid or unenforceable by a court of competent jurisdiction, the remaining provisions shall remain in full force and effect.
• Assignment: Rockstand may assign or transfer its rights and obligations under these Terms to any successor entity or affiliate without the Client's consent. The Client may not assign or transfer any of its rights or obligations under these Terms without Rockstand's prior written consent.
• Notices: Any notice or communication required or permitted under these Terms shall be in writing and delivered by email, registered post, or hand delivery to the address(es) provided by the Client or to Rockstand's registered office.