Risk Statement

1. Concentration risk

The risk that investing in a limited number of Positions (i.e. one or a limited few financial instruments) will result in the value of your investment being more volatile than if you invested in a more diversified investment strategy. This is because your investment is exposed to a smaller range of assets and is therefore more sensitive to fluctuations in the value of those assets.

2. Counterparty risk

A key area of risk associated with OTC CFDs/options is the counterparty risk borne by Clients, i.e. the potential for the issuer to be unable to fulfil its obligations resulting in loss for the Clients. As BROKER issues the CFDs/options, you are dealing with BROKER as the counterparty to every transaction. You will therefore be exposed to the financial and business risks, including credit risk, associated with dealing with BROKER. Each Option is an over-the-counter contract and is not traded on an exchange or market. You will not be able to transfer or assign the CFDs/options to any other person. Only BROKER can close your Positions. OTC CFDs/options are not guaranteed by an exchange or clearing house, and Clients therefore face the risk that BROKER may fail to meet some or all of its obligations. You are reliant on BROKER's ability to meet its counterparty obligations to you to settle its relevant obligations. If BROKER were to become insolvent, then we may be unable to meet our obligations to you in full or at all. In this case, the Clients may become unsecured creditors in an administration or liquidation and will not have recourse to any underlying assets in the event of BROKER insolvency. Clients must rely on BROKER to have in place appropriate arrangements to minimise the risk that it will not be able to meet its obligations.

3. Currency / Market risk

This is the risk that the markets move in a direction not anticipated by you. Changes to the markets of the underlying assets can have an immediate impact on the value of your investment. Positive movements in other markets, such as equity markets, or other countries, can negatively affect your investment; especially where the investments in the other market are used as a hedge for the instrument you hold (or vice versa).

4. Derivative risk

CFDs/options are derivative financial products. The value of a derivative is linked to the value of an underlying asset and can be highly volatile. Risks associated with using derivatives may include, but are not limited to, the value of the derivative failing to move in line with that of the underlying asset and the potential illiquidity of the derivative. While the use of derivatives can offer the opportunity for higher returns, it can also magnify your losses.

5. Execution risk

There are a number of risks relating to our ability to execute an order placed (both in opening and closing a Position) on the Trading Platform. These include:

5.1 Slippage / Gapping

There are occasions when there are larger than ordinary 'gaps' in the depth of orders on both the buy and sell side. This is usually due to a change in liquidity circumstances and effects the volatility and volume of available matching orders. This is commonly referred to as 'slippage'. It will generally occur prior to, during and subsequent to the release of fundamental news where major financial institutions have removed their orders from the liquidity markets pending the outcome of that news. This creates conditions where orders are difficult to execute at desired prices, as there are large 'gaps' in the buying and selling depth of a particular currency pairing or precious metal. This can cause significant losses where this occurs when we are attempting to automatically close your position or where you have placed a stop loss at a particular point. The next best available price may be significantly lower than the trigger point for an automatic close of your position or your elected to place a stop loss.

5.2 Delays in execution

The risk that an execution you place is delayed or not executed due to a delay in transmission of data between your device and its software and BROKER's Trading Platform and respective servers (see System Risk). This may result in the available price you had placed an order at no longer being available. As you will generally be accessing the Trading Platform over a third party Internet service provider there is a risk that this may be caused by your computer not maintaining a constant connection with the BROKER servers.

5.3 Reject/reset orders

Conditions may arise that make it difficult to execute orders at the given price due to an extremely high volume of orders and/or available liquidity. By the time orders are able to be executed, the Bid/Offer price at which BROKER (or its counterparty) is willing to execute a position may be several pips away.

5.4 Unavailable pricing

The risk that a financial instrument you intend to trade in or hold an open Position for is not offered by BROKER at a particular time. This generally occurs when liquidity in that relevant marker decreases and BROKER's liquidity providers are unable to provide a market for those products to BROKER. Clients will not be able to execute trades on such products.

5.5 Hedging risk

You may use the CFDs/options to for the purposes of hedging risks associated with other investments held on markets. The ability to hedge an underlying asset price by holding CFDs/options that move inversely to the other Positions you hold potentially allows you to protect your losses from either product. There is the risk that even a fully hedged Position may suffer losses due to rollover costs, exchange rate fluctuations or widening spreads. In addition, while a hedged Position reduces exposure to decreases in the value of an option it will generally also reduce the potential for increased gains. If you are entering into an option for the purposes of hedging, then the taxation consequences will depend on the nature of the underlying transaction or the asset or liability which is being hedged.

6. Powers of BROKER to terminate and/or adjust your CFDs/options transactions

In accordance with the Important Disclosure we may at any time, with or without notice:

• cancel, reject or reverse any Position in respect of any CFDs/options as BROKER reasonably deems appropriate;
• set or amend any limits for a Client's account, including without limitations in respect of order’s size, total number of Positions;
• terminate a Client's account and prevent the Client from accessing the Trading Platform;
• amend or void any CFD/option contract and in any proportion the Client may have with BROKER, including without limitations adjust the price, size or value of the Position;
• refuse Orders.

BROKER may exercise its rights as specified above, as a result of any of the events, which include without limitation the following:

• Full of partial failure of the BROKER trading system, including failure of the technology constituting the marketplace trading system or any of the communications linked to the BROKER trading system and the Client and/or any of the counterparties, or any other circumstance which is deemed impractical to use the BROKER trading system;
• A breach of security of the BROKER trading system;
• A material breach by the Client of his obligations under the Important Disclosure;

You should consider the above mentioned powers and rights of BROKER while trading CFDs/options with us.