RISK DISCLOSURE STATEMENT For Transactions in Foreign Exchange and Derivatives
(Including Contracts for Differences)
In consideration of Blue Seal LTD. (hereinafter referred
to as “MIB700”, “we” or “us”) agreeing to enter into over-the-counter
(“OTC”) contracts for differences (“CFD's”) and spot foreign exchange contracts
(“Spot FX Contracts”) with the undersigned (hereinafter referred to as the
“Customer”, “you”, or “your”), Customer acknowledges, understands and agrees
This statement, which constitutes an addition to the Retail
Client Agreement and the General Terms & Conditions, cannot and does not
disclose or explain all of the risks and other significant aspects involved in
trading foreign exchange and derivatives. Engaging in these types of
transactions can carry a high risk to your capital, potentially resulting in
the total loss of such capital. Should you require a more comprehensive
understanding of the risks involved, please contact MIB700 for
In consideration of the risks, you should not engage in
trading in the above mentioned products unless you understand the nature of the
contracts and the contractual legal relationship into which you are entering.
Transactions in foreign exchange derivatives are not suitable for many members
of the public. You should carefully consider whether transacting in foreign
exchange is appropriate for you in light of your experience, objectives,
financial position and other relevant circumstances.
If in doubt, it is advisable to seek independent financial
Foreign Exchange and Derivatives Trading Is Very Speculative
Trading CFD's and Spot FX Contracts is highly speculative,
and involves a significant risk of loss; it may not be suitable for all investors
but only for those customers who:
(a) Understand and are willing to assume the economic, legal
and other risks involved;
(b) Are experienced and knowledgeable about trading in
derivatives and in underlying asset types; and
(c) Are financially able to assume losses significantly in
excess of margin or deposits because investors may lose the total value of the
contract not just the margin or the deposit.
Neither CFD's nor Spot FX Contracts are appropriate
investments for retirement funds. CFD and FX transactions are among the
riskiest types of investments and can result in large losses. Customer
represents, warrants and agrees that Customer understands these risks, and is
willing and able, financially or otherwise, to assume the risks of trading
CFD's and Spot FX Contracts; and that the loss of Customer’s entire Account
balance will not change Customer’s lifestyle.
Risks related to Long CFD positions, i.e. for purchasers of
Being Long in a CFD means you are buying the CFD's on the
market by speculating that the market price of the underlying asset will rise
between the time of the purchase and sale. As owner of a long position, you
will generally make a profit if the market price of the underlying asset rises
whilst your CFD long position is open. On the contrary, you will generally
suffer a loss, if the market price of the underlying asset falls whilst your
CFD long position is open. Your potential loss may therefore be bigger than the
initial margin deposited. In addition, you might suffer a loss as a result of
closing your position, in circumstances which you do not have enough liquidity
for the margin on your account in order to maintain an open position.
Risks related to Short CFD positions, i.e. for sellers of
Being Short in a CFD means you are selling the CFD's on the
market by speculating that the market price of the underlying asset will fall
between the time of the purchase and sale. As owner of a short position, you
will generally make a profit if the market price of the underlying asset falls
whilst your CFD short position is open. On the contrary, you will generally
suffer a loss, if the market price of the underlying asset rises whilst your
CFD short position is open. Your potential loss may therefore be bigger than
the initial margin deposited. In addition, you might suffer a loss as a result
of closing your position, in circumstances which you do not have enough
liquidity for the margin on your account in order to maintain an open position.
The high degree of “Gearing” or “Leverage” is a particular
feature of both CFD's and Spot FX Contracts. The effect of leverage makes
investing in CFD's riskier than investing in the underlying asset. This stems
from the margining system applicable to CFD's which generally involves a small
deposit relative to the of the transaction, so that a relatively small
price movement in the underlying asset can have a disproportionately dramatic
effect on your trade. This can be both advantageous and disadvantageous. A
small price movement in your favor can provide a high return on the deposit,
however, a small price movement against you may result in significant losses
which could exceed the money placed on deposit. Such losses can occur quickly.
The greater the leverage, the greater the risk. The of leverage therefore
partly determines the result of the investment.
Transactions in foreign exchange and derivatives carry a
high degree of risk. The high degree of “Leverage” or “Gearing” that is often
obtainable in foreign exchange and derivatives trading can work against you as
well as for you due to fluctuating market conditions. If the market moves
against you, you may not only sustain a total loss of your initial margin
deposit, and any additional funds deposited with MIB700 to
maintain your position, but you many also incur further liability to MIB700. You may be called upon to deposit additional funds on short notice
to maintain your position. Failing to comply with a request for deposit of
additional funds may result in closure of your position(s) by MIB700
on your behalf; you will be liable for any resulting loss or deficit.
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 adequate given that market conditions or technological limitations
that may make it impossible to execute such orders, e.g. due to illiquidity in the
market. It should be noted that strategies using combinations of positions,
such as “Spread” and “Straddle” positions may be as risky as taking simple
“long” or “short” positions.
Customer must maintain the minimum margin requirement on
their open positions at all times. It is Customer’s responsibility to monitor
his/her Account balance. Customer may receive a margin call to deposit
additional cash if the margin in the account concerned is too low. MIB700 has the right to liquidate any or all open positions whenever the
minimum margin requirement is not maintained. This may result in Customer’s
CFD's or Spot FX Contracts being closed at a loss for which you will be liable.
The difference between Our Bid Price and Our Ask Price is
“Our Spread”. Our Spreads are set in our absolute discretion, since we are
acting as market maker, and any changes are effective immediately
Customer understands that CFD and Spot FX Contracts can only
be settled in cash, and the difference between the buying and selling price
partly determines the result of the investment.
MIB700 is the counterparty to all Transactions
entered into under the Customer Agreement and, as such, MIB700’s
interests may be in conflict with yours. Our conflicts of interest policy is
available at MIB700’s website.
When trading CFD's or Spot FX Contracts with us, such
Transactions will not be executed on a recognized or designated investment
exchange and are known as OTC (Over The Counter) transactions. All positions
entered into with us must be closed with us and cannot be closed with any other
entity. OTC transactions may involve greater risk than investing in on-exchange
contracts because there is no exchange market on which to close out an open
position. It may be impossible to liquidate an existing position, to assess the
value of the position arising from an OTC transaction, or to assess the
exposure to risk. Bid Prices and Ask Prices may not be quoted by us, based on
best execution policies applicable in the market and even when they are, MIB700 may find it difficult to establish a fair price particularly when
the relevant exchange or market for the underlying asset is closed or suspended.
There is no central clearing and no guarantee by any other party of MIB700’s payment obligations to the Customer. Thus the Customer is exposed
to credit risk with MIB700. The customer must look only to MIB700 for performance of all contracts in the Customer’s Account and for
return of any Margin or Collateral.
Under certain market conditions, it may be difficult or
impossible to liquidate a position, increasing the risk of loss. This may
occur, for example, at times of rapid price movement if the price for the
underlying asset rises or falls in one trading session to such an extent that
trading in the underlying asset is restricted or suspended.
Prices, Margin And Valuations Are Set By MIB700
And May Be Different From Prices Reported Elsewhere
MIB700 will provide prices to be used in
trading, valuation of Customer positions and determination of Margin
Requirements in accordance with its Trading Policies and Procedures and Market
Information Sheets. The performance of your CFD or Spot FX Contract will depend
on the prices set by MIB700 and market fluctuations in the
underlying asset to which your contract relates. Each underlying asset
therefore carries specific risks that affect the result of the CFD concerned.
Our prices for a given market are calculated by reference to
the price of the relevant underlying asset which we obtain from third party
external reference source\s or exchange\s. For our CFD and Spot FX Contracts,
we obtain price data from wholesale market participants. Although MIB700 expects that these prices will be reasonably related to prices
available in the market, MIB700’s prices may vary from prices
available to banks and other market participants. MIB700 has
considerable discretion in setting and collecting Margin. MIB700
is authorized to convert funds in Customer’s Account for Margin into and from
such foreign currency at a rate of exchange determined by MIB700
in its sole discretion on the basis of then-prevailing money market rates.
You have no rights or obligations in respect of the
underlying instruments or assets relating to your CFD's or Spot FX Contracts.
The Customer understands that CFD's can have different underlying assets, such
as stocks, indices, currencies and commodities.
Investing in Spot FX Contracts and CFD's with an underlying
asset listed in a currency other than your base currency entails a currency
risk, due to the fact that when the CFD or Spot FX Contract is settled in a
currency other than your base currency, the value of your return may be
affected by its conversion into the base currency.
MIB700 Is Not An Adviser Or A Fiduciary To
Where MIB700 provides generic market
recommendations, such generic recommendations do not constitute a personal
recommendation or investment advice and have not considered any of your
personal circumstances or your investment objectives, nor is it an offer to buy
or sell, or the solicitation of an offer to buy or sell, any Foreign Exchange
Contracts or Cross Currency Contracts. Each decision by Customer to enter into
a CFD or Spot FX Contract with MIB700 and each decision as to
whether a transaction is appropriate or proper for Customer, is an independent
decision made by the Customer. MIB700 is not acting as an advisor
or serving as a fiduciary to Customer. Customer agrees that MIB700
has no fiduciary duty to Customer and no liability in connection with and is not
responsible for any liabilities, claims, damages, costs and expenses, including
attorneys’ fees, incurred in connection with Customer following MIB700’s generic trading recommendations or taking or not taking any action
based upon any generic recommendation or information provided by MIB700.
The generic market recommendations provided by MIB700 are based solely on the judgment of MIB700’s personnel
and should be considered as such. Customer acknowledges that he/she enters into
any Transactions relying on their own judgment. Any market recommendations
provided are generic only and may or may not be consistent with the market
positions or intentions of MIB700 and/or its affiliates.
The generic market recommendations of MIB700
are based upon information believed to be reliable, but MIB700
cannot and does not guarantee its accuracy or completeness. Therefore,
following such generic recommendations will not reduce or eliminate the risk
inherent in trading CFD's and/or Spot FX Contracts.
There are no guarantees of profit nor of avoiding losses
when trading CFD's and Spot FX Contracts.
Customer has received no such guarantees from MIB700 or from any of its representatives. Customer is aware of the risks
inherent in trading CFD's and Spot FX Contracts and is financially able to bear
such risks and withstand any losses incurred.
Due to market conditions which may cause any unusual and
rapid market price fluctuations, or other circumstances, v
may be unable to close out Customer’s position at the price specified by
Customer and the risk controls imposed by MIB700 might not work.
Customer agrees that MIB700 will bear no liability for a failure
to do so.
Trading through MIB700’s trading system may
differ from trading on other electronic trading systems as well as from trading
in a conventional or open market. Trading on an electronic trading system will
expose you to risks associated with the system including the failure of
hardware and software, system downtime, in relation to either MIB700’s
trading system or the individual customer’s system and the communications
infrastructure (e.g. the internet) connecting MIB700’s platform
with MIB700’s customers. 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 and a lack of capability to keep you informed continuously
about your positions and fulfillment of the margin requirements.
When Customer trades online (via the internet), MIB700 shall not be liable for any claims, losses, damages, costs or
expenses, caused, directly or indirectly, by any malfunction, disruption or
failure of any transmission, communication system, computer facility or trading
software, whether belonging to MIB700, Customer, any exchange or
any settlement or clearing system.
Should a quoting error occur (including responses to
Customer requests), MIB700 is not liable for any resulting errors
in Account balances and reserves the right to make necessary corrections or
adjustments to the relevant Account. Any dispute arising from such quoting
errors will be resolved on the basis of the fair market value, as determined by
MIB700 in its sole discretion and acting in good faith, from the
relevant market at the time such an error occurred.
In cases where the prevailing market represents prices
different from the prices MIB700 has posted on our screen, v will attempt, on a best efforts basis, to execute Transactions on or
close to the prevailing market prices. These prevailing market prices will be
the prices, which are ultimately reflected on the Customer statements. This may
or may not adversely affect the Customer’s realized and unrealized gains and
You have the responsibility to fully understand the trading
rules and/or terms and conditions of the transactions to be undertaken and/or
the Retail client Agreement, including, but without limitation any terms
describing risk factors, such as volatility, liquidity, and so on.
Various situations may arise over a weekend (Friday 22:00
CET – Sunday 23:30 CET), or during a holiday when the financial markets
generally close for trading, that may cause the markets to open at a
significantly different price from where they closed. MIB700
customers will not be able to use the MIB700 trading system to
place or change orders over the weekend, on market holidays or and at other
times when the markets are generally closed. There is a substantial risk that
stop-loss orders left to protect open positions held during these periods will
be executed at levels significantly worse than their specified price.
Before you begin to trade, you should obtain from us details
of all commissions and other charges for which you will be liable. These
charges will affect your net profit or loss.
You acknowledge that you can afford to lose the sums that
you remit to MIB700 as deposit. When you deposit money with us,
this will generally be held in a segregated client’s account held with one or
more authorized credit and/or banking institution/s situated in Europe and/or
in an EEA member state as shall be indicated on the MIB700
website from time to time. The companies set rules pertaining to client money
and Safeguarding of Client Assets will apply. You acknowledge that the holding
of money in a segregated client’s account may not provide complete protection,
particularly in the event of the insolvency of any third party institution/s
entrusted by MIB700 to hold client assets.
Blue Seal LTD. has no obligation to cease
entering into transactions when the assets on the Account decrease, even
substantially. Therefore, the client undertakes to control the development of
his/her account so as to be able to terminate the asset management service if
s/he is of the opinion that the results do not conform to his/her expectations
Leveraging a position is an expression in Forex trading;
whereby collateral (often referred to as margin) is put down to cover a
position significantly larger than the funded value. It is common for brokers
to offer clients 300 effectively allowing the trade value to be multiplied
300 times of the balance in the account.
I / WE HAVE READ, UNDERSTOOD AND AGREE TO THE RISK
DISCLOSURE STATEMENT AND THE TRADING POLICIES AND PROCEDURES SET OUT ABOVE