Contents
Risk Acknowledgment and Disclosure
A. Risk Warning Notice for OTC Leveraged Products
Investing in OTC Leveraged Products involves the risk of losing substantially more than the margin posted.
Prospective clients should study the following risk warnings very carefully. Please note that we do not explore or explain all the risks involved when dealing in OTC Leveraged Products. We outline the general nature of the risks of dealing in these on a fair and non-misleading basis.
In particular, Contracts for Difference ('CFDs') are complex financial products and not suitable for all investors. CFDs, are leveraged products that mature when you choose to close an existing open position. By investing in CFDs, you assume a high level of risk and can result in the loss of all of your invested capital and any profits not redeemed.
Unless a client knows and fully understands the risks involved in each Instrument, they should not engage in any trading activity. You should not risk more than you are prepared to lose. We will not provide clients with any investment advice in relation to investments, possible transactions in investments, neither will we make any investment recommendations.
Clients should consider which Instrument is suitable for them according to their financial status and goals before opening an account with us. If a client is unclear about the risks involved in trading CFDs, then they should consult an independent financial advisor. If the client still doesn't understand these risks after consulting an independent financial advisor, then they should refrain from trading at all. Purchasing and selling Financial Instruments comes with a significant risk of losses and damages and each client must understand that an investment value can both increase and decrease, which could result in losing more than the initial invested capital.
B. Risk Warning Notice for Foreign Exchange and Derivative Products
This notice cannot disclose all the risks and other significant aspects of foreign exchange and derivative products such as futures, options, and Contracts for Differences. You should not deal in these products unless you understand their nature and the extent of your exposure to risk. You should also be satisfied that the product is suitable for you in light of your circumstances and financial position. Although forex and derivative instruments can be used for the management of investment risk, some of these products are unsuitable form any investors. You should not engage in any dealings directly or indirectly in derivative products unless you know and understand the risks involved. Different instruments involve different levels of exposure to risk and in deciding whether to trade in such instruments you should be aware of the following points:
Effect of Leverage (Boost)
- Margin trading and use of leverage amplifies losses when they occur. Under Margin Trading conditions even small market movements may have great impact on the Client's Trading Account. The Client must consider the risk of losing money and accumulating losses rapidly. The Client is responsible for all risks, financial resources the Client uses and for the chosen trading strategy.
- It is recommended to place a Stop Loss with every trade to limit potential losses, and Take Profit to collect profits, when it is not possible for the Client to manage the Client's Open Positions. However, the prices of instruments and the underlying asset will be influenced by, amongst other things, changing supply and demand relationships, governmental, agricultural, commercial and trade programs and policies, national and international political and economic events and the prevailing psychological characteristics of the relevant market place. Therefore, Stop Loss order cannot guarantee the limit of loss.
Liquidity
- Some of the underlying assets may not become immediately liquid as a result of reduced demand for the underlying asset and the Client may not be able to obtain the information on the value of these or the extent of the associated risks. The risk of slippage also exists, i.e. a divergence between the price at which a trade was approved and the price at which it was executed.
Futures
- Transactions in futures involve the obligation to make, or to take, delivery of the underlying asset of the contract at a future date, or in some cases to settle the position with cash. They carry a high degree of risk. The gearing or leverage often obtainable in futures trading means that a small deposit or downpayment can lead to large losses as well as gains. It also means that a relatively small movement can lead to a proportionately much larger movement in the value of your investment, and this can work against you as well as for you. Futures transactions have a contingent liability, and you should be aware of the implications of this, in particular the margining requirements, which are set out below.
Contracts for Differences
- The CFDs available for trading with the Company are non-deliverable spot transactions giving an opportunity to make profit on changes in currency rates, commodity, stock market indices or share prices called the underlying instrument. If the underlying instrument movement is in the Client's favour, the Client may achieve a profit, but an equally small adverse market movement can not only quickly result in the loss of the Client’s entire deposit but also any additional table-accordion commissions and other expenses incurred. So, the Client must not enter into CFDs unless he is willing to undertake the risks of losing entirely all the money which he has invested and also any additional table-accordion commissions and other expenses incurred.
- Investing in a Contract for Differences carries the same risks as investing in a future or an option and you should be aware of these as set out above. Transactions in Contracts for Differences may also have a contingent liability and you should be aware of the implications of this as set out below.
- All financial investments involve an element of risk. The value of any investment the Client makes through may fall as well as rise and the Client may get backless than his/her initial investment. Past performance is not an indication of future performance.
Off-exchange Transactions in Derivatives
- CFDs, forex and precious metals are off-exchange transactions. While some off-exchange markets are highly liquid, transactions in off-exchange or non-transferable derivatives may involve greater risk than investing in on-exchange derivatives because there is no exchange market on which to closeout an Open Position. It may be impossible to liquidate an existing position, to assess the value of the position arising from an off-exchange transaction or to assess the exposure to risk. Bid prices and Ask prices need not be quoted, and, even where they are, they will be established by dealers in these instruments and consequently it may be difficult to establish what is a fair price.
- In regard to transactions in CFDs, forex and precious metals with the Company, the Company is using a trading platform for transactions in CFDs which does not fall into the definition of a recognized exchange as this is not a Multilateral Trading Facility and so do not have the same protection.
Contingent Liability Investment Transactions
- Contingent liability investment transactions, which are margined, require you to make a series of payments against the purchase price, instead of paying the whole purchase price immediately. The Margin requirement will depend on the underlying asset of the instrument. Margin requirements can be fixed or calculated from the current price of the underlying instrument; it can be found on the website of the Company.
- If you trade in futures, Contracts for Differences or sell options, you may sustain a total loss of the funds you have deposited to open and maintain a position. If the market moves against you, you may be called upon to pay substantial additional funds at short notice to maintain the position. If you fail to do so within the time required, your position may be liquidated at a loss, and you will be responsible for the resulting deficit. It is noted that the Company will not have a duty to notify the Client of any Margin Call to sustain a loss-making position.
- Even if a transaction is not margined, it may still carry an obligation to make further payments in certain circumstances over and above any amount paid when you entered the contract.
Conflict of Interest
- When we deal with you or on your behalf, we (or an employee, officer or our Associate), may have a material interest in the outcome of your Transaction that conflicts with your interest.
- A conflict of interest involving our clients may arise, between (a) our client and us; (b) two of our clients; (c) our client and our employees (officers, associates).
- If there is a potential conflict of interest involving you or all of our clients, we may disclose the general nature and circumstances of this conflict before proceeding with the Transaction in question.
- A potential conflict of interest exists in the following circumstances:
(a) we are on the other side of your Transaction as a principal trading on its own account;
(b) we may match your Transaction with that of another client by acting on his/her/its behalf as well as yours;
(c) we may provide Services to other clients concerning Transactions in a market that might be against your interests;
(d) we may receive inducements (incl., non-monetary) from persons other than our clients if they are designed to enhance the quality of our Services and do not impair our ability to act in the best interests of our clients.
- You acknowledge that you are aware of the possibility that the circumstances disclosed in this section may result in a conflict of interest and authorize us to proceed with the Transaction in question notwithstanding such conflict.
