RISK DISCLOSURE STATEMENT FOR TRANSACTIONS IN FOREIGN EXCHANGE AND DERIVATIVES (INCLUDING CFDs AND OTC OPTIONS)
RTFX Limited (“RTFX” or “we” or “us”), a privatelimited liability company registered in accordancewith the Laws of Malta and having its registeredoffice at Level 2, Suite 2, The Cornerstone Complex16th September Square, Mosta, MST1180, Malta?EU, bearing company registration number C46029,is licensed by the Malta Financial Services Authority(“MFSA”) as a Category 3Investment Services Provider.
This statement, which constitutes an addition tothe General Terms & Conditions, cannot and doesnot disclose or explain all of the risks and othersignificant aspects involved in trading foreignexchange and derivatives. Engaging in these typesof transactions can carry a high risk to your capital,potentially resulting in the total loss of such capital.Should you require a more comprehensiveunderstanding of the risks involved, you shouldcontact RTFX for further information.
In consideration of the risks, you should not engagein trading in the mentioned products unless youunderstand the nature of the contracts and thecontractual legal relationship into which you areentering. Transactions in foreign exchange andderivatives are not suitable for many members ofthe public. You should carefully consider whethertransacting in foreign exchange and derivatives isappropriate for you in light of your experience,objectives, financial position and other relevantcircumstances. If in doubt, it is advisable to seekindependent financial advice.
FOREIGN EXCHANGE AND DERIVATIVES
1.Effect of “Leverage” or “Gearing”
Transactions in foreign exchange and derivativescarry a high degree of risk. The high degree of“leverage” or “gearing” that is often obtainable inforeign exchange and derivatives trading can workagainst you as well as for you due to fluctuatingmarket conditions. If the market moves againstyou, you may not only sustain a total loss of yourinitial margin deposit, and any additional fundsdeposited with RTFX to maintain your position, butyou may also incur further liability to RTFX. Youmay be called upon to deposit additional funds onshort notice to maintain your position. Failing tocomply with a request for a deposit of additionalfunds may result in closure of your position(s) byRTFX on your behalf and you will be liable for anyresulting loss or deficit.
2.Risk-reducing Orders or Strategies
The placing of certain orders (e.g. “stop?loss”orders or “stop-limit” orders), which are intendedto limit losses to certain amounts, may not beadequate given that market conditions ortechnological limitations may make it impossible toexecute such orders, e.g. due to illiquidity in themarket. Strategies using combinations of positions,such as “spread” and “straddle” positions may beas risky as taking simple “long” or “short” positions.
3.Variable Degree of Risk
Transactions in OTC options carry a high degree ofrisk. Such transactions should be entered into onlyif you have read, understood and familiarisedyourself with the types of options (i.e. put or call),style of exercise, nature and extent of rights andobligations and associated risks of suchtransactions. You should calculate the extent towhich the value of the OTC option must increasefor the position to become profitable, taking intoaccount the premium and all transaction costs.
You should not purchase any OTC option unless youare able to sustain a total loss of the premium andtransaction costs associated with purchasing theOTC option.
The risks associated with selling (“writing” or“granting”) an OTC option generally entailconsiderably greater risk than purchasing an OTCoption. If the option is not “covered” by the sellerholding a corresponding position in the underlyingasset or in another option, the potential loss isunlimited.
Therefore, due to the high degree of risk associatedwith selling “uncovered” options, RTFX will onlyallow a client to sell an option if the option is“covered” specifically by an existing correspondinglong OTC option.
ADDITIONAL RISKS COMMON TO FOREIGN EXCHANGE
AND DERIVATIVE TRANSACTIONS
4.Terms and Conditions of Contracts
You have the responsibility to fully understand the trading rules and/or terms and conditions of the transactions to be undertaken, including, butwithout limitation:a) any terms describing risk factors, such asvolatility, liquidity, and so on;b) the terms as to the price, term, expiration date,restrictions on exercising an OTC option andof the terms material to the transaction; andc) the circumstances under which you may becomeobliged to make or take delivery of an OTCoptions contract.
When trading foreign exchange and derivativeproducts, you will be entering into “over-thecounter”(OTC) or “off-exchange” derivativetransactions. All positions entered into with RTFXmust be closed with us and cannot be closed withany other entity. Transactions in OTC derivativesmay involve greater risk than investing in onexchangederivatives because there is no exchangemarket on which to close out an open position. Itmay be impossible to liquidate an existing position,to assess the value of the position arising from anoff-exchange transaction or to assess the exposureto risk. Bid prices and offer prices need not bequoted, and, even where they are, RTFX may find itdifficult to establish a fair price particularly whenthe relevant exchange or market for the underlyingis closed or suspended.
6.Suspensions of trading
Under certain market conditions, it may be difficultor impossible to liquidate a position, increasing therisk of loss. This may occur, for example, at times ofrapid price movement if the price for theunderlying asset rises or falls in one trading sessionto such an extent that trading in the underlyingasset is restricted or suspended.
Trading through RTFX’s trading system may differfrom trading on other electronic trading systems aswell as from trading in a conventional or openmarket. Trading on an electronic trading systemwill expose you to risks associated with the systemincluding the failure of hardware and software,system downtime, with respect to either RTFX’strading system or the individual customer’s system,and the communications infrastructure (e.g. theinternet) connecting RTFX’s platform with RTFX’scustomers. The result of any system failure may bethat your order is either not executed according toyour instructions or is not executed at all and a lackof capability to keep you informed continuouslyabout your positions and fulfilment of the marginrequirements.
Various situations may arise over a weekend(Friday 22:00 CET – Sunday 23:30 CET), or during aholiday when the financial markets generally closefor trading, that may cause the markets to open ata significantly different price from where theyclosed. RTFX customers will not be able to use theRTFX trading system to place or change orders overthe weekend, on market holidays or and at othertimes when the markets are generally closed.There is a substantial risk that stop-loss orders leftto protect open positions held during these periodswill be executed at levels significantly worse thantheir specified price.
9.Charges and commissions
Before you begin to trade, you should obtain fromus details of all commissions and other charges forwhich you will be liable. These charges will affectyour net profit or loss.
10.Money and Collateral
You acknowledge that you can afford to lose thesums that you remit to RTFX as deposit. When youdeposit money with us, this will generally be held ina segregated clients’ account held with one or moreauthorised credit and/or banking institution/ssituated in Switzerland and/or in an EEA memberstate as shall be indicated on the RTFX Web Sitefrom time to time. The MFSA’s rules pertaining toclient money and Safeguarding of Client Assets willapply. You acknowledge that the holding of moneyin a segregated clients’ account may not providecomplete protection, particularly in the event ofthe insolvency of any third party institution/sentrusted by RTFX to hold client assets.
11.Specific risks to Asset Management and Advisory Services
RTFX Limited has no obligation to cease enteringinto transactions when the assets on the Accountdecrease, even substantially. Therefore, the clientundertakes to control the development of his/heraccount so as to be able to terminate the assetmanagement service if s/he is of the opinion thatthe results do not conform to his/her expectationsor needs.