RISK DISCLOSURE STATEMENTS AND DISCLAIMERS
This brief statement does not disclose all of the risks and other significant aspects of trading in metals. In light of the risks, you should undertake such transactions only if you understand the nature of the contracts (and contractual relationships) into which you are entering and the extent of your exposure to risk. Trading in metals is not suitable for many members of the public. You should carefully consider whether trading is appropriate for you in light of your experience, financial resources, objectives and other relevant circumstances.
1. Risk of Trading in Leveraged Metals Contracts
The risk of loss in leveraged metals trading can be substantial. You may sustain losses in excess of your initial margin funds. Market conditions may make it difficult or impossible for the Company to quote the bid and ask prices for a leveraged metals contract. Placing contingent orders, such as “stop-loss” or “stop-limit” orders, will not necessarily limit losses to the intended amounts. Market conditions may make it impossible to execute such orders. You may be called upon at short notice to deposit additional margin funds. If the required funds are not provided within the prescribed time, your position may be liquidated without your prior consent. You will remain liable for any resulting deficit in your account. You should therefore carefully consider whether such trading is suitable in light of your own financial position and investment objectives.
2. Risk of Margin Trading
The risk of loss in financing a transaction by deposit of collateral is significant. You may sustain losses in excess of your initial margin funds. Market conditions may make it impossible to execute contingent orders, such as “stop-loss” or “stop-limit” orders. You may be called upon at short notice to make additional margin deposits or interest payments. If the required margin deposits and interest payments are not made within the prescribed time, your collateral may be liquidated without your consent. Moreover, you will remain liable for any resulting deficit in your account and interest charged on your account. You should therefore carefully consider whether such a financing arrangement is suitable in light of your own financial position and investment objectives.
3. Risk-reducing orders or strategies
The placing of certain orders (e.g. ‘stop-loss’ orders, or ‘stop-limit’ orders), which are intended to limit losses to certain amounts, may not be effective because market conditions may make it impossible to execute such orders.
4. Commission and other charges
Before you begin to trade, you should obtain a clear explanation of all commission, fees and other charges for which you will be liable. These charges will affect your net profit (if any) or increase your loss.
5. Currency risks
The profit or loss in transactions in foreign currency-denominated contracts (whether they are traded in your own or another jurisdictions) will be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currencies.
6. Trading facilities
Most open-outcry and electronic trading facilities are supported by computer-based component systems for the order-routing, execution, matching, registration or clearing of trades. As with all facilities and systems, they are vulnerable to temporary disruption or failure. Your ability to recover certain losses may be subject to limit on liability imposed by the system provider, the market, the clearing house and/ or member firms. Such limits may vary: you should ask the firm with which you deal for details in this respect.
7. Electronic trading
Trading on an electronic trading system may differ not only from trading in an open-outcry market but also from trading on other electronic trading systems. If you undertake transactions on an electronic trading system, you will be exposed to risk associated with the system including the failure of hardware and software. The result of any system failure may be that your order is either not executed according to your instructions or is not executed at all. Moreover, communications and personal data may be accessed by unauthorized third party; and there are risks of misunderstanding or errors in any communication and such risks shall be absolutely borne by you.
8. Risk of slippage
Slippage can be a common occurrence in metals trading. Clients should familiarize themselves with how slippage can occur, so as to effectively manage associated risks. This could happen during periods of high volatility or pricing gaps in the market due to unexpected news or economic data announcements, etc. When an order is filled at a more favorable price, it is known as positive slippage; alternatively, when an order is filled at an unfavorable price to the original order, it is referred to as negative slippage.
9. Rollover Risk
Depending on the interest rate differential between the two currencies, traders can earn rollover or pay rollover. Depending on the volume of the transaction, rollover can add a significant extra cost or profit to the transaction.
10. Credit Risk
Clients are unsecured creditors of Eastern United Development Limited of precious metals contracts and they have no preferential claim to any assets an issuer may hold. Therefore, clients are exposed to credit risk in respect to Eastern United Development Limited.
11. Off-exchange transactions
In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect off-exchange transactions. The firm with which you deal may be acting as your counter party to the transaction. It may be difficult or impossible to liquidate an existing position, to assess the value, to determine a fair price or to assess the exposure to risk. For these reasons, these transactions may involve increased risks. Off-exchange transactions may be less regulated or subject to a separate regulatory regime. Before you undertake such transactions, you should familiarize yourself with applicable rules and attendant risks.