Risk Notice

Preamble
 
Risk Notice – Leveraged / Margin Trading
Trading Contracts for Difference (CFDs) involves a high level of risk and may not be suitable for all investors. CFDs are leveraged products, meaning that both profits and losses can be significantly magnified. As a result, you may lose more than your initial investment. Before engaging in CFD trading, you should ensure that you fully understand how CFDs work and the risks involved. You should carefully assess your investment objectives, financial situation, risk tolerance, and level of experience. Where necessary, you are strongly encouraged to seek independent financial, legal, or tax advice. Past performance is not a reliable indicator of future results. Market conditions can change rapidly, and there is no guarantee that any trading strategy will be successful.

About Derivatives
Derivatives include instruments is mainly CFDs. Their value is derived from underlying assets like equities, indices, bonds, currencies, or commodities, which can be highly volatile.

A key feature of these instruments is that they can be traded with little or no initial outlay—through margin (for CFDs). This creates leverage, meaning small movements in the underlying asset can lead to large changes in the derivative’s value, potentially requiring additional variation margin.

Futures
Futures are listed derivatives whose prices depend on the value of underlying assets and can be affected by factors such as interest rates, supply and demand, government policies, and national or global economic and political events.

Key risks include:

• • Exchange or clearinghouse risk – failure of the exchange or clearinghouse may affect your positions.
  • Liquidity and price limits – some exchanges impose daily price limits; if these are reached, you may be unable to enter, adjust, or close positions, potentially leading to substantial losses.
  • Leverage risk – low margin requirements can magnify gains or losses, so small changes in the underlying asset may cause large financial impacts.
  • Trading suspension – in extraordinary circumstances, exchanges or regulators may suspend trading or force liquidation of positions.

Leverage
Derivatives often require little or no initial outlay, allowing you to take positions larger than your invested capital. This amplifies gains and losses, so even small changes in the underlying asset can cause large swings in your trading returns.

If the market moves against your positions, losses can be substantial and may exceed your invested capital. Failure to meet margin or financing obligations may also allow lenders to close out your positions or claim any securities held as collateral.

Margin Trading and Borrowing
Margin trading involves borrowing funds from your broker to increase your exposure beyond your invested capital. You can leverage positions using derivatives such as CFDs as well as other complex instruments with embedded leverage.

Key considerations:

• • Interest and costs – borrowing and leveraged positions incur interest, transaction, and other costs, which may not be fully offset by trading returns.
  • Leverage magnitude – the amount you can borrow may be substantial relative to your capital, amplifying both gains and losses.
  • Rate impact – prevailing interest rates and your specific borrowing rates can significantly affect your net trading results.

Margin Requirements and Margin Calls
When using leverage through derivatives, margin trading, or other borrowing, you must post initial margin or collateral in cash or securities.

If the value of your account or pledged assets declines, you may receive a margin call, requiring you to deposit additional funds or securities.

Failure to meet a margin call can result in:

• • Forced liquidation of positions or collateral
  • Closing positions at a loss, potentially larger than anticipated
  • Inability to act quickly, if market conditions prevent timely liquidation

Investment Dealers that provide financing for clients’ margin trading may apply discretionary margin requirements, haircuts, and security or collateral valuation policies. Changes to these policies, or the imposition of other credit limitations or restrictions whether due to market conditions, government, regulatory, or judicial action may result in:

• • Large margin calls,
  • Loss of financing,
  • Forced liquidation of positions at highly disadvantageous prices,
  • Termination of contracts and agreements, and
  • Cross-defaults with other dealers.

These adverse effects can be intensified if such limitations or restrictions are imposed suddenly or by multiple market participants. As a result, you may be forced to liquidate all or part of your portfolio at highly disadvantageous prices, potentially leading to the complete loss of your committed capital. There is no guarantee that you will be able to secure or maintain adequate financing or collateral for margin trading at all times.

Default
All transactions entail counterparty credit and default risk. These risks are mitigated for exchange-traded instruments, which are generally backed by clearinghouse guarantees, daily mark-to-market and settlement, and segregation and minimum capital requirements applicable to intermediaries. However, transactions entered into directly between two counterparties, do not generally benefit from such protections, and expose the counterparties to a greater risk of counterparty default. Moreover, in certain circumstances, it may not be possible for the cash, securities and other assets deposited with custodians or brokers to be clearly identified as belonging to you, whereby you may be exposed to broker or custodian credit, default, settlement, clearing and delivery risk. In addition, there may be practical, legal, operational or temporal problems associated with enforcing your rights to your assets in case of insolvency of any counterparty, custodian or broker.

If a counterparty defaults, you may have contractual remedies under the relevant agreements. However, exercising such rights may involve delays or costs, which could erode or reduce a portion of your capital.

Additionally, there is a risk that any counterparty could become insolvent or subject to insolvency proceedings. In such cases, the recovery of your positions or securities, or the payment of claims, may be significantly delayed, and you may recover substantially less than the full value of the contracts or underlying assets.

Similar risks apply to your relationships with brokers or prime brokers. You should generally assume that the insolvency of any counterparty could result in a material loss, which may be worsened if your assets are not segregated.

Trading
Executing transactions on markets outside your home jurisdiction including markets formally connected to your home market may involve additional risks.

Regulation in these foreign markets may differ from your home jurisdiction and may provide a lower level of investor protection. Your local regulatory authority cannot guarantee compliance with the rules established by regulatory authorities or market operators in other jurisdictions where your transactions take place.

Most electronic trading systems rely on information technology hardware (e.g., computers or servers) and software (e.g., order-book protocols and order management programs) to route orders, match bids and offers, manage operations, and register, clear, and settle transactions.

Like all information technology systems, these trading platforms are subject to failures or malfunctions. Your ability to recover certain losses may be limited by the liability limits set by the system providers, markets, clearinghouses, and/or dealing firms. These limits can vary, so it is important to obtain detailed information from your dealing firm regarding applicable liability coverage.