The Forex Market

This brief statement does not purport to disclose all of the risks and other significant aspects of engaging in Spot Forex Transactions. In light of the risks inherent in these transactions, 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 Spot FX Contracts is not suitable for many members of the public. You should carefully consider whether FX trading is appropriate for you in the light of your experience, objectives, financial resources and other relevant circumstances.

•  Effect of "Leverage" or "Gearing"
Spot Forex Transactions carry a high degree of risk. The amount of initial margin is small relative to the value of the Spot FX Contract so that transactions are "leveraged" or "geared". A relatively small market movement will have a proportionately larger impact on the funds you have deposited or will have to deposit; this may work against you as well as for you. You may sustain a total loss of initial margin funds and of any additional funds deposited with the firm to maintain your position. If the market moves against your position or margin levels are increased, you may be called upon to pay substantial additional funds on short notice to maintain your position. If you fail to comply with a request for additional funds within the time prescribed, your position may be liquidated at a loss and you will be liable for any resulting deficit.

•  Risk-reducing orders or strategies
The placing of certain orders (e.g., "stop-loss" orders or "stop-limit" orders) that are intended to limit losses to certain amounts may sometimes not be effective because market conditions may make it impossible to execute such orders. Strategies using combinations of positions, such as "spread" and "straddle" positions may be as risky as taking simple "long" or "short" positions.

•  Terms and conditions of contracts
You should ask the firm with which you deal about the terms and conditions of the specific currencies, which you are trading and their related obligations (e.g., the circumstances under which you may become obligated to make or take physical delivery of the full currency value).

•  Suspension or restriction of trading and pricing relationships
Market conditions (e.g., illiquidity) and/or the operation of the rules of certain markets (e.g., suspension of trading in any Spot FX Contract because of price limits, government intervention or "circuit breakers") may increase the risk of loss by making it difficult or impossible to effect transactions or liquidate/offset positions.

•  Deposited cash and property
You should familiarize yourself with the protections accorded to money or other property you deposit for domestic and foreign transactions, particularly in the event of a firm insolvency or bankruptcy. The extent to which you may recover your money or property may be governed by specific legislation or local rules. In some jurisdictions, property that had been specifically identified as your own will be pro-rated in the same manner as cash for purposes of distribution in the event of a shortfall.

•  Commission and other charges
Before you begin to trade, you should obtain a clear explanation of all commissions, fees, cross-currency overnight interest debits, mark-ups, mark-downs and other charges for which you will be liable. These charges will affect your net profit (if any) or increase your loss.

•  Transactions in other jurisdictions
Spot FX Transactions executed in other jurisdictions may expose you to additional risk. Such markets may be subject to regulation, which may offer different or diminished investor protection. Before you trade you should inquire about any rules relevant to your particular transactions. Your local regulatory authority, if any, will be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where your transactions have been effected. You should ask the firm with which you deal for details about the types of redress available in both your home jurisdiction and other relevant jurisdictions before you start to trade.

•  Currency risks
The profit or loss in transactions in foreign currency-denominated contracts (whether they are traded in your own or another jurisdiction) will be affected by fluctuations in currency rates where there is a need to convert from the currency denomination of the contract to another currency.

•  Trading facilities
Spot FX Contracts are not traded on a regulated market and therefore do not require open-outcry facilities. The electronic trading facilities through which Spot FX Contracts are primarily traded are supported by computer-based component systems for the order-routing, execution or matching 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 limits on liability imposed by the system provider, the market, the bank and/or financial institution. Such limits may vary: you should ask the firm with which you deal for details in this respect.

•  Electronic trading
Trading on a particular electronic trading system may differ from trading on other electronic trading systems. If you undertake transactions on an electronic trading system, you will be exposed to risks 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.

11. Off-exchange transactions
Spot Forex Transactions are not conducted on organized futures exchanges. The firm with which you deal may be acting as your counterparty 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.