Risk Acknowledgement and Disclosure

INVESTMENT PRODUCTS

This notice provides you with information about the risks associated with investment products, which you may invest in through services provided to you by Finance Administrator entities. Finance Administrator provides a wide range of investment services in relation to a number of products. Contracts for difference (‘CFDs’) and securities are provided by Finance Administrator Markets Limited through a CFD Account or Share Trading account. Finance Administrator is referred to in this notice as ‘Finance Administrator’, ‘we’, ‘our’ or ‘us’. Our share trading services allow you to invest in a number of products including physical shares, Managed Investment Schemes (‘MIS’), generally Exchange Traded Funds (‘ETFs’) and Exchange Traded Commodities (‘ETCs’). Each investment product and service has its own distinct risks. This notice provides a general description of the risks of the products that you are able to trade or invest in through your Finance Administrator Accounts, and the services provided by Finance Administrator. This notice does not explain all of the risks involved in investment products or how such risks relate to your personal circumstances. It is important that you fully understand the risks involved before making a decision to enter into a CFD (a ‘Contract’) with us or to buy or sell an instrument (each, a ‘Transaction’) available through a Share Trading Account. If you are in any doubt about the risks involved with your Account, you should seek professional advice. You should note that: • Physical shares admitted to trading on a regulated market and certain Exchange Traded Funds are not high risk financial products; • Exchange Traded Commodities and other Exchange Traded Funds are considered high risk, and are not suitable for many members of the public; • CFDs are high risk financial products, which are not suitable for many members of the public If you choose to enter into a Contract with us or instruct us to conduct a Transaction on your behalf, it is important that you remain aware of the risks involved, that you have adequate • Physical shares admitted to trading on a regulated market and certain Exchange Traded Funds are not high risk financial products; • Exchange Traded Commodities and other Exchange Traded Funds are considered high risk, and are not suitable for many members of the public. • CFDs are high risk financial products, which are not suitable for many members of the public If you choose to enter into a Contract with us or instruct us to conduct a Transaction on your behalf, it is important that you remain aware of the risks involved, that you have adequate financial resources to bear such risks and that you monitor your positions carefully.

 

GENERAL RISKS

In relation to all our Accounts, the following risks are applicable.

NO ADVICE

Our services are provided on an execution only basis. We do not provide investment advice in relation to our products or services. We sometimes provide factual information or research recommendations about a market, information about transaction procedures and information about the potential risks involved and how those risks may be minimised. However, any decision to use our products or services is made by you. You are responsible for managing your tax and legal affairs including making any regulatory filings and payments and complying with applicable laws and regulations. We do not provide any regulatory, tax or legal advice. If you are in any doubt as to the tax treatment or liabilities of investment products available through any of your Accounts, you may wish to seek independent advice.

 

QUALIFICATION

Before we open an account for you, we are required to make an assessment of whether the product(s) and/or services you have chosen are appropriate for you. We will only deal with you if, in our sole judgement, we consider you have qualified. It is your responsibility to understand the risks involved with our products or services. During our application process, we will ask you for information about your financial assets and earnings. We do not monitor on your behalf whether the amount of money you have sent to us or your profits or losses are consistent with that information. It is up to you to assess whether your financial resources are adequate for your financial activity with us and your risk appetite in the products and services you use.

 

COSTS AND CHARGES

Please be aware of all costs and charges that apply to you, because such costs and charges will affect your profitability.

 

NEED TO MONITOR POSITIONS

It is important that you monitor all of your positions closely. It is your responsibility to monitor your positions and during the period that you have any open Contracts or are holding any instruments in a Share Trading Account, you should always have the ability to access your Accounts.

 

ELECTRONIC COMMUNICATIONS

We offer you the opportunity to deal and communicate with us via electronic means, for example by our dealing platform and, in certain circumstances, by email. Although electronic communication is often a reliable way to communicate, no electronic communication is entirely reliable or always available. If you choose to deal with us via electronic communication, you should be aware that electronic communications can fail, can be delayed, may not be secure and/or may not reach the intended destination.

 

OUR SERVICES

Instructions to deal from you to us form a commitment which may only subsequently be revoked by you with our prior consent (such consent will not be unreasonably withheld) at any time before the instruction to deal is executed. All instruments offered through our Share Trading Account are listed on an exchange, which means that the prices are not set by us. We will act on any instruction that you provide us to buy or sell an instrument on your behalf in accordance with our obligation to provide best execution as set out in our order execution policy, to act reasonably and in accordance with the applicable Customer Agreement. We may place your instructions to deal outside of an exchange if this satisfies our order execution policy. As part of our service, we will arrange for the custody of your instruments. All investments purchased for you or transferred to us by you into your Finance Administrator Trading Account will be purchased in the name of and/or held by a nominee company selected by us, for the benefit of you. As investments will be held in the name of a nominee company, you may not have voting rights which you would have had if you held the investment in your own name.

 

CONTRACTS FOR DIFFERENCE (CFDs)

Nature

CFDs are a type of transaction the purpose of which is to secure a profit or avoid a loss by reference to fluctuations in the value or price of an underlying instrument. Types of CFDs include but are not limited to, Foreign Exchang

e CFDs, Futures CFDs, Option CFDs, Share CFDs and Stock Index CFDs. CFDs can only be settled in cash.

 

Risks

Investing in a CFD carries a high degree of risk because the ‘gearing’ or ‘leverage’ often obtainable 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; it is possible to lose more money than your initial deposit.

 

Range Of Markets

We offer our Contracts across a wide range of underlying markets. Although the prices at which you open Contracts are derived from the underlying market, the characteristics of our Contracts can vary substantially from the actual underlying market or instrument. Full details of all of our Contracts are set out in the Product Details section on our website, including: contract size, margin rates, last dealing time, settlement procedures, rollover procedures, commissions and currency.

 

Non-guaranteed Stops

When a Non-guaranteed Stop is triggered it has the effect of issuing an order from you to us to close your Contract. Your Contract is not closed immediately when the Stop is triggered. We aim to deal with such orders fairly and promptly but the time taken to fill the order and the level at which the order is filled depends upon the underlying market. In fast-moving markets, a price for the level of your order might not be available or the market might move quickly and significantly away from the Stop level before we are able to fill it. To prevent this risk, Guaranteed Stops are available on certain Contracts.

 

Corporate Events

We do not aim to make a profit from our clients from the outcome of corporate events such as rights issues, takeovers, mergers, share distributions or consolidations and open offers. We aim to reflect the treatment we receive, or, would receive if we were hedging our exposure to you in the underlying market. Ultimately however, you are not dealing in the underlying market and therefore in relation to our Contracts:

  • the treatment you receive may be less advantageous than if you owned the underlying instrument;
  • • we may have to ask you to make a decision on a corporate event earlier than if you owned the underlying instrument;
  • the options we make available to you might be more restricted and less advantageous to you then if you owned the underlying instrument;
  • where you have a Stop attached to your open share position, the treatment that you will receive from us will always, to the greatest extent possible, aim to preserve the economic equivalent of the rights and obligations attached to your Contract with us immediately prior to the corporate event taking place Going short on individual shares Going short on an individual share via a CFD or Spread bet carries some additional risks. These risks include but are not limited to:
  • forced buy-back due to changes in regulatory or stock-borrowing conditions;
  • imposition of, and increase in, borrowing charges over the lifetime of the Contract;
  • the obligation to take the other side of purchase opportunities (eg rights issues) afforded to clients who are long on the same stock. This might result in the obligation to go further short at unfavourable market prices In addition, you should be aware that corporate events affecting obligations of short sellers can often be announced at very short notice, leaving no opportunity (or choice) to close Contracts out and avoid participation.

 

Tax

There is a risk that our understanding may be incorrect and/or that the tax treatment of these products may change. In the event that we are obliged to pay any tax in respect of your personal liability for CFDs undertaken with us, the Customer Agreement contains an indemnity that would allow us to recover such payments from you.

 

GENERAL TRADING RISKS

It is important that you understand the risks associated with trading in the relevant underlying market because fluctuations in the price of the underlying market will affect your instruments and the profitability of your trades. CFDs are financial products that allow you to speculate on price movements in underlying markets and although the prices at which you trade these products are set by us, our prices are derived from the underlying market.

 

PAST PERFORMANCE

Past performance is not an indication of future performance. The value of investments can go down as well as up. Contracts you enter into with us are legally enforceable by both parties.

 

CURRENCY

If you trade in a market other than your base currency market, currency exchange fluctuations will impact your profits and losses.

 

VOLATILITY

Movements in the price of underlying markets can be volatile and unpredictable. This will have a direct impact on your profits and losses. Knowing the volatility of an underlying market will help guide you as to where any Stops should be placed.

 

MARKET LIQUIDITY

In setting our prices, spreads and the sizes in which we deal, we take into account the market or markets for the relevant underlying instruments. Market conditions can change significantly in a very short period of time, so that if you wish to sell an instrument or close a Contract, you may not be able to do so under the same terms as when you purchased or opened it. Under certain trading conditions it may be difficult or impossible to liquidate a position. This may occur, for example, at times of rapid price movement if the price rises or falls in one trading session to such an extent that under the rules of the relevant exchange trading is suspended or restricted.

 

GEARING AND LEVERAGE

Before you are allowed to enter into a Contract with us, you will generally be required to deposit money with us – this is called the margin requirement. This margin requirement will usually be a relatively modest proportion of the overall Contract value, 10% of the Contract value, for example. This means that you will be using ‘leverage’ or ‘gearing’ and this can work for or against you; a small price movement in your favour can result in a high return on the margin requirement placed for the Contract, but a small price movement against you may result in substantial losses. At all times during which you have open positions, you must ensure that your account balance, taking into account all running profits and losses, is equal to at least the total margin requirement that we require you to have deposited with us. Therefore, if our price moves against you, you may need to provide us with significant additional funds to meet your margin requirement, at short notice, to maintain your open positions. If you do not do this, we will be entitled to close one or more or all of your positions. You will be responsible for any losses incurred as a result. You should also be aware that under the applicable Customer Agreement we are entitled to increase margin rates at short notice. If we do so, you may be required to deposit additional funds into your account to cover the increased margin rates. If you do not do this, we will be entitled to close one or more or all of your positions. Unless you have taken steps to place an absolute limit on your losses (for example, by attaching a Guaranteed Stop) it is possible for adverse market movements to result in the loss of the whole of your account balance and more, so that you owe additional money to us. We offer a range of risk management tools to help you to manage this risk. The need to monitor your positions is of greater importance when you have entered into Contracts with us because of the effect of gearing. Gearing magnifies the rate at which profits or losses can be incurred and, as a result, it is important that you monitor your positions closely.

 

REGULATORY AND LEGAL RISK

The risk that a change in laws and regulations will materially impact a security and investments in a sector or market. A change in laws or regulations made by the government or a regulatory body can increase the costs of operating a business, reduce the attractiveness of investment and/or change the competitive landscape and as such alter the profit potential of an investment. This risk is unpredictable and may vary from market to market. In emerging market such risk may be higher as in more developed markets. For example in emerging markets the inadequacy or absence of regulatory measures can give rise to an increased danger of market manipulation, insider trading or the absence of financial market supervision can affect the enforceability of legal rights.