Risk Warning
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 Financial Instruments. We outline the general natureof the risks of dealingin Financial Instruments on a fair and
non-misleading basis.
In particular, Contracts for Difference ('CFDs') arecomplex financial products andnot suitable for all investors. CFDs,are leveraged productsthat mature when you chooseto close an existing open position. By investing in CFDs, you assume a high levelof risk and can resultin the loss of all of your invested capital.
Unless a client knows and fully understands the risks involvedin each Financial Instrument, they should not engage in any trading activity.You should not risk more than you are preparedto lose. PNM will not provide clientswith any investment advice in relationto investments, possible transactions in investments, or Financial Instruments, neither will we make any investment recommendations.
Clients should considerwhich Financial Instrument is suitable for them accordingto their financial statusand goals beforeopening an accountwith PNM. If a clientis unclear aboutthe risks involved in trading in Financial Instruments, then they shouldconsult an independent financial advisor.If the client still doesn'tunderstand these risks after consulting an independent financial advisor, then they should refrain from trading at all.
Purchasing and selling Financial Instruments comes with asignificant risk of losses and damages and each client must understand that the investment value can both increase and decrease, clients they are liable for all these losses and damages, which could resultin more than the initial investedcapital once they make the decision has been made to trade.
Acknowledgement
Technical Risk
1. The Client shall beresponsible for the risks of financial losses caused by the failureof information, communication, electronic and other systems. The result of any system failure may be that his order is either not executedaccording to his instructions or it is not executedat all. The Company does not acceptany liability in the case ofsuch a failure.
2. While trading through theClient Terminal the Client shall beresponsible forthe risks of financial losses caused by:
a) Client's orCompany's hardware or software failure, malfunction or misuse;
b) poor Internet connection either on theside ofthe Client or theCompany orboth, or interruptions ortransmission blackouts or public electricity network failures or hackerattacks, overload of connection;
c) the wrong settings inthe Client Terminal;
d) delayed Client Terminal updates;
e) the Clientdisregarding the applicable rules described in the Client Terminal user guide and in the Company's Website.
Abnormal Market Conditions
3. The Clientacknowledges that under Abnormal MarketConditions the period during which the Instructions and Requests are executed may be extended.
Trading Platform
4. The Clientacknowledges that only one Requestor Instruction is allowed to be in thequeue at one time. Once the Clienthas sent a Request or an Instruction, any further Requests or Instructions sent by the Client are ignored and the "Order is locked" message appearsuntil the first Request or Instruction is executed.
5. The Client acknowledges that the only reliable source of Quotes Flow information is that of the real/live Server'sQuotes Base. QuotesBase in the Client Terminalis not a reliablesource of QuotesFlow information becausethe connection between the Client Terminal and the Servermay be disrupted at some point and some of theQuotes simply may not reach the Client Terminal.
6. The Client acknowledges that when the Client closes the order placing/modifying/deleting window or the position opening/closing window, the Instruction or Request, which has been sent to the Server, shall not be cancelled.
7. In case the Clienthas not receivedthe result of the execution of the previously sent Instruction but decidesto repeat the Instruction, the Client shall accept the risk of making two Transactions instead of one, however the client may receive an "Orderis locked" message as described in point 2.5 above.
8. The Client acknowledges that if thePending Order has already been executed but the Client sends theInstruction tomodify itslevel andthe levels of If-Done Orders at the same time, theonly Instruction, which will be executed, is theInstruction to modify Stop Loss and/or Take Profit levels on the positionopened when the Pending Order triggered.
Communication
9. The Client shall accept the risk of any financial losses caused by the fact that the Client has received with delay or has not received at all any notice from theCompany.
10. The Client acknowledges that the unencrypted information transmitted by email is not protected from any unauthorised access.
11. The Clientis fully responsible for the risksin respect of undelivered trading platform internal mail messagessent to the Client by the Companyas they are automatically deleted within 3 (three)calendar days.
12. The Client is wholly responsible forthe privacy of theinformation received from the Company and accepts the risk of any financial lossescaused by the unauthorised access of a third party to the Client'sTrading Account.
13. The Companyhas no responsibility if authorized/unauthorised third persons have access to information, including electronic addresses, electronic communication and personal data, access data when the above are transmitted betweenthe Company or any other party,using the internetor other networkcommunication facilities, telephone, or any other electronic means.
Force Majeure Event
14. In case of aForce Majeure Event theClient shall accept therisk offinancial losses.
Risk Warning Notice forForeign Exchange and Derivative Products
15. This notice cannotdisclose all the risks and other significant aspects of foreign exchange and derivative productssuch as futures, options, and Contracts for Differences. You should not deal in these productsunless 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. Certain strategies, such as a "spread" position or a "straddle", may be as risky as asimple Long or Short position.
Although forex and derivative instruments can be used for the management of investment risk, some of these productsare unsuitable for many investors. You should not engage in any dealings directly or indirectly in derivative products unlessyou know and understand the risks involvedin them and that you may lose entirelyall of your money. Different instruments involve differentlevels of exposureto risk and in deciding whetherto trade in such instruments you should be aware of thefollowing points:
Effect of Leverage
16. Under Margin Tradingconditions even small market movements may have great impact on the Client'sTrading Account. It is important to note that all accounts trade under the effectof Leverage. The Client must consider that if the marketmoves against the Client, the Client may sustain a total loss greater than the funds deposited. The Client is responsible for all the risks, financialresources the Client uses and for the chosen tradingstrategy.
It is highly recommended that the Clientmaintains a Margin Level (percentage Equity to Necessary Margin ratio which iscalculated as Equity / Necessary Margin
* 100%) of not lower than 1,000%. It is alsorecommended to place Stop Loss to limit potential losses, and Take Profit to collectprofits, when it is not possible for the Client to manage the Client's OpenPositions.
The Client shallbe responsible for all financiallosses caused by the openingof the position usingtemporary excess Free Margin on the Trading Account gained as a result of a profitableposition (cancelled by the Companyafterwards) opened at anError Quote (Spike) or at a Quote received as a result of a Manifest Error.
High Volatile Instruments
17. Some Instruments trade within wide intraday ranges with volatile price movements. Therefore, the Client must carefullyconsider that there is a high risk of losses aswell as profits. The priceof Derivative financialinstruments is derivedfrom the price of the underlying asset in which the instruments refer to (for examplecurrency, stock, metals, indices, etc). Derivative financial instruments and relatedmarkets can be highly volatile. The prices of instruments and the underlying asset
may fluctuate rapidly and over wide ranges and mayreflect unforeseeable events or changes in conditions, none of whichcan be controlled by the Client or theCompany. Under certain market conditions it may be impossible for a Client'sorder to be executedat declared price leading to losses. The prices of instruments and theunderlying asset will be influenced by, amongst otherthings, changing supply and demand relationships, governmental, agricultural, commercial and tradeprograms 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.
The Client acknowledges and accepts that,regardless of any information which may be offered by the Company, the value of Instruments may fluctuate downwardsor upwards and it is even probablethat the investment may become of no value.
This is owed to the margining system applicable to such trades,which generally involves a comparatively modestdeposit or marginin terms of the overallcontract value, so that a relatively small movement in the underlying market can have adisproportionately dramatic effect on the Client's trade. If the underlying marketmovement is in the Client'sfavour, the Client may achievea good profit, but an equally small adverse market movement can not only quickly result in the loss of the Client’s entire deposit, but may also expose the Client to a large additional loss.
Liquidity
18. 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.
Futures
19. Transactions infutures involve the obligation to make, or totake, delivery of the underlying assetof 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 tradingmeans that a small depositor down payment can lead to large lossesas well as gains. It also meansthat a relatively small movement can lead to a proportionately much larger movementin the value of your investment, and this can work againstyou as well as for you. Futures transactions have a contingent liability, and you should be aware of theimplications of this, in particular the margining requirements, which are set outbelow.
Options
20. There aremany different types ofoptions with different characteristics subject to the followingconditions.
Buying Options:
Buying options involvesless risk than selling optionsbecause, if the price of theunderlying asset movesagainst you, you can simplyallow the optionto lapse. The maximum loss is limited to thepremium, plus any commission or other transaction charges. However, if you buy a call option on a futurescontract and
you later exercise the option, you will acquire thefuture. This will expose you to the risks described under futures' and contingent liability investment transactions.
Writing Options:
If you writean option, the risk involvedis considerably greaterthan buying options. You may be liable for margin to maintain your position and a loss may be sustained well in excessof the premium received. By writing an option, you accepta legal obligation to purchaseor sell the underlying asset if the option is exercisedagainst you, however far the market pricehas moved away from the exerciseprice. If you already own the underlying asset which you have contracted to sell (when the options will be knownas covered call options) the risk is reduced. If youdo not own the underlying asset (uncovered call options) the risk can be unlimited. Only experienced persons should contemplate writing uncovered options, and then only after securing full details of the applicable conditions and potentialrisk exposure.
Contracts forDifferences
21. The CFDs available for trading with the Companyare non-deliverable spot transactions giving an opportunity to make profiton changes in currency rates, commodity, stock market indices or share prices called the underlying instrument.If the underlying instrument movementis in the Client's favour,the Client may achieve a good profit, but an equally small adverse market movement can not only quickly resultin the loss of the Client’s entiredeposit but also any additional
table-accordion commissions and other expensesincurred. So, the Client must notenter into CFDs unless he is willingto undertake the risks of losing entirelyall the money which he hasinvested and also any additional table-accordion commissions and other expensesincurred.
Investing in a Contract for Differences carriesthe same risks as investingin 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 shouldbe aware of the implications of this as set out below.
Off-exchange Transactions in Derivatives
22. CFDs, forex and preciousmetals 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 becausethere is no exchange marketon which to close out an Open Position. It may be impossible to liquidate an existing position,to assess the valueof the position arising from an off-exchange transaction or to assess the exposureto risk. Bid prices and Ask pricesneed not be quoted, and, even wherethey are, they will be established by dealers in these instruments and consequently it maybe difficult to establish what is a fair price.
In regards to transactions in CFDs, forex and preciousmetals with the Company,the Company is using a trading platformfor transactions in CFDs which does not fallinto the definitionof a recognized exchange as this is not a MultilateralTrading Facility and so do not have the same protection.
Foreign Markets
23. Foreign marketsinvolve various risks.On request, the Company must provide an explanation of the relevant risks and protections (if any) which will operate in any foreignmarkets, including the extent to which it will accept liability for any defaultof a foreign firm throughwhom it deals.The potential for profit or loss from transactions on foreign marketsor in foreign denominated contracts will be affected by fluctuations in foreign exchangerates.
Contingent Liability Investment Transactions
24. Contingent liability investment transactions, which aremargined, require you to make a series of payments againstthe purchase price,instead of payingthe whole purchaseprice immediately. The Margin requirement will depend on the underlyingasset of the instrument. Margin requirements can be fixed or calculated from current price of the underlying instrument, it can be found on the website of theCompany.
If you trade in futures, Contracts forDifferences orsell options, you maysustain a total loss of the funds you have depositedto open and maintain a position. If themarket moves against you, you may be called upon to pay substantial additional funds at short notice to maintainthe 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 Clientfor any Margin Call to sustain a loss-making position.
Even if a transaction is not margined,it may still carry an obligation to makefurther payments in certain circumstances over and above any amountpaid when you entered thecontract.
Contingent liability investment transactions which arenot traded on orunder the rules of arecognised or designated investment exchange may expose you to substantiallygreater risks.
Collateral
25. If you deposit collateral as security with the Company,the way in which it will be treated will vary according to the type of transaction and where it is traded. There could be significant differences in the treatmentof your collateral depending on whether you are tradingon a recognised or designated investment exchange, with the rules of that exchange (and the associated clearing house) applying, or tradingoff-exchange. Deposited collateral may lose its identity as your propertyonce dealings on your behalf are undertaken. Even if your dealings should ultimatelyprove profitable, you may not get back the same assets whichyou deposited, and mayhave to accept payment in cash. You should ascertainfrom your firm howyour collateral will be dealt with.
Commissions andTaxes
26. Before you begin to trade, you should make yourself aware of all table-accordioncommissions and othercharges for whichyou will be liable. If any chargesare not
expressed inmonetary terms (but, forexample, asa percentage of contract value), you should ensure that you understand the true monetaryvalue of the charges.
27. There is a risk that the Client's trades in any Financial Instruments including derivative instruments may be or become subject to tax and/or any other duty for examplebecause of changes in legislation or his personal circumstances. The Company does not warrantthat no tax and/or any other stampduty will be payable. The Client is responsible for any taxes and/or any other duty which may accrue in respect of his trades.
Suspensions of Trading
28. Under certaintrading conditions it may be difficult or impossible to liquidate a position. This may occur,for example, at times of rapid pricemovement if the price rises or fallsin one trading session to such an extent that under the rules of therelevant exchange tradingis suspended or restricted. Placinga Stop Loss will not necessarily limit your lossesto the intended amounts, becausemarket conditions may make it impossible to execute such an Order at the stipulatedprice. In addition, under certainmarket conditions the execution of a Stop LossOrder may be worse than its stipulated price and the realized lossescan be larger than expected.
Clearing House Protections
29. On many exchanges, the performance of a transaction by your firm (or thirdparty with whom it is dealingon your behalf) is guaranteed by the exchangeor clearing house. However,this guarantee is unlikely in most circumstances to cover you, the Client, and may not protect you if your firm or another partydefaults on its obligations to you. On request, the Company must explain any protection providedto you under the clearingguarantee applicable to any on-exchange derivatives in which you are dealing.There is no clearing house for traditional options, nor normally for off-exchange instruments which are not traded underthe rules of arecognised or designated investment exchange.
Insolvency
30. The Company's insolvency or default,may lead to positions beingliquidated or closed out without your consent. In certain circumstances, you may not get back theactual assets which you lodged as collateral and you may have to accept any available payments in cash or by any other method deemed to be appropriate.
31. Segregated Funds will besubject tothe protections conferred byApplicable Regulations.
32. Non-segregated Funds will not be subjectto the protections conferred by Applicable Regulations. Non-segregated Fundswill not be segregated from theCompany's money and will be used in the course of the Company's business,and in the event of the Company's insolvency you will rank as a general creditor.
Third PartyRisk
This notice isprovided toyou inaccordance with applicable legislation.
33. The Companymay pass moneyreceived from the Client to a thirdparty (e.g. a bank, a market, intermediate broker, OTC counterparty or clearing house) to hold or control in order to effect a Transaction through or with that person or to satisfy theClient 's obligationto provide collateral (e.g. initial margin requirement) in respectof a Transaction. The Company has no responsibility for any acts oromissions of any third party to whom it will pass money received from the Client.
34. The third party to whom the Company will pass money may hold it in an omnibus account and it may not be possible to separate it from the Client 's money, or thethird party's money. In the event of the insolvency or any other analogousproceedings in relationto that thirdparty, the Companymay only have anunsecured claim against the third party on behalf of the Client, and the Client will be exposedto the risk that the money receivedby the Company from the thirdparty is insufficient to satisfy the claims of the Client with claims in respect of the relevant account.The Company does not accept any liabilityor responsibility for any resulting losses.
35. The Companymay deposit Clientmoney with a depository who may have asecurity interest, lien or right of set-off in relation to that money.
36. A Bank or Brokerthrough whom the Company dealswith could have interestscontrary to the Client's interests.
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