Risk Disclosure investorseuropeRISKS DISCLOSURE POLICY FOR OPERATIONS WITH FOREIGN CURRENCY AND DERIVATIVES
(INCLUDING CFDs, FUTURES AND OPTIONS)

This short warning, being an addition to the General Terms of Business, is not intended to mention all risks and other important aspects of operations with foreign currency and derivatives. Considering the risks, you should not settle transactions of the aforementioned products if you are not aware of the nature of the contracts you enter into, the legal aspects of such relations within the context of such contracts, or the degree of your exposure to risk. Operations with foreign currency and derivatives are not recommendable for many persons. You have to thoroughly evaluate to what extent such operations are recommendable for you, taking into consideration your experience, aims, financial resources, and other important circumstances.

1. OPERATIONS WITH FOREIGN CURRENCY AND DERIVATIVES

1.1 “Leverage” or the “Gearing” effect
Operations with foreign currency and derivatives are connected with a high level of risk. The amount of the initial margin may seem small in comparison with the value of the foreign currency contracts or derivatives, since the “leverage” or “gearing” effect is used therein, in the course of trade. Relatively inconsiderable market movements will have proportionally increasing impact on the amounts deposited, or intended to be deposited by you. This circumstance may work either for you, or against you. When supporting your position, you may incur losses to the extent of the initial margin, and any additional sums of money deposited in the Company. If the market started moving in the opposite direction of your position, and/or the amount of the required margin increased, then the Company may require you to urgently deposit additional sums of money to support the position. Failure to meet the requirement to deposit additional sums of money may result in the closing of your position/s by the Company, and you will bear the responsibility for any losses or lack of funds connected therewith.

1.2 Orders and Strategies reducing the risk
Placement of certain orders (for example, “stop-loss” orders, if this is allowed by local legislation, or “stop-limit” orders), which restrict the maximum amount of losses, may turn out to be inefficient if the market situation makes execution of such orders impossible (for example, upon illiquidity of the market). Any strategies using combinations of positions, for example, “spread” and “straddle” may not be less risky than those connected with common “long” and “short” positions.

2. OPERATIONS WITH OPTIONS

2.1 Variable degree of risk
Operations with foreign currency and derivatives are connected with a high level of risk. The buyers and sellers of options shall study the particularities of the option type (i.e. put or call) if they consider the possibility of operations with it and the risks connected. The Client shall estimate the extent to which the options value should grow in order for his/her position to become profitable, taking into consideration the premium amount, and transaction costs.

The option buyer may close the option position by opening the opposite position, or execute the option or permit the term of validity of the option to expire. Execution of an option is carried out in the form of a cash settlement or acquisition/supply of the respective asset by the option buyer. If the asset of the option is futures, then the buyer option thus opens a futures position with the respective obligations for support of the margin (see the foregoing section “Futures”). If the purchased option, upon expiry of its term of validity, has “out-of-the-money” status, then as a whole the Client shall incur losses on his/her investment instrument to the extent of the option premium and transaction costs. When a purchase of options with the “out-of-the-money” status is considered, it becomes obvious that the probability for such options to bring profit is extremely low.

The sale (“issuing” or “granting”) of an option is connected, on a whole, with a considerably higher risk than the purchase of an option. Despite the fixed premium size obtained by the option seller, s/he may incur considerably greater losses than the premium amount. The option seller is obliged to contribute an additional amount to the margin deposit, in order to support the position, if an adverse change in the market situation occurs. The seller also bears the risks should the buyer will require execution of the option, as a result whereof the seller will have to close a position by cash settlement or acquisition/supply of the respective asset. If the asset of the option is futures then the option seller thus opens a futures position with the respective obligations to support the margin (see the foregoing section “Futures”). If the option is “covered” by the seller, by opening the respective position in the market of the asset of the option, futures or another option, then this risk may be lowered. If the option is an uncovered option, then the risk of losses may be unlimited.

In some countries stock exchanges allow the deferral of repayment of the option premium, whereby the buyer owes an obligation on margin deposits up to, but not exceeding the amount of the premium. In this case, the buyer continues to bear the risk of losses in the amount of the premium and transaction costs. Upon execution or expiry of the term of validity of the option, the buyer owes the obligation on payment of any amount of unpaid premium at that moment.

3. ADDITIONAL RISKS SPECIFIC TO TRANSACTIONS WITH FOREIGN CURRENCY AND DERIVATIVES

3.1 Conditions for entering into contracts
You need to obtain from your dealing firm detailed information about the conditions for entering into contracts, and any obligations connected therewith (for example, about the circumstances, wherein you may accrue the obligation to carry out or accept delivery of any asset within the framework of a futures contract, or, in the case of an option, information about the expiration dates and the time limitations for executing options). Under some circumstances, a stock exchange or clearinghouse may change the requirements of unsettled contracts (including the strike price), to reflect changes in the market of the respective asset.

3.2 Suspension or restriction of trade, Price correlation 
Certain market situations (for example, illiquidity) and/or the operating rules of some markets (for example, suspension of trade with respect to contracts or months of contracts, due to an excess in the limits of price changes) may increase the risk of losses incurred, since executing transactions or squaring/netting positions becomes difficult or impossible. Losses could increase, if you sell options. A well-grounded interconnection does not always exist between prices of the asset and the derivative asset. The absence of a benchmark price for an asset may make a “fair value” estimation difficult .

3.3 Deposited funds and property
You should familiarize yourself with protective instruments, within the limits of the Security deposited by you in the form of cash or any other assets, when executing an operation either inside the country or abroad, especially if insolvency or bankruptcy of a dealing firm could be an issue. The extent to which you can return your cash or other assets is regulated by the legislation and local country standards wherein the Counterparty carries out its activities.

3.4 Commission fees and other charges
Prior to participating in any trades you should get clear details on all commission fees, remunerations and other charges that will need to be paid by you. These expenses will affect your net financial result (profit or loss).

3.5 Transactions in the other jurisdictions
Execution of transactions on markets in any other jurisdictions, including markets formally connected with your internal market may result in additional risks for you. Regulation of the aforementioned markets may differ from yours in degree of investor protection (including a lower degree of protection). Your local regulatory authority is unable to ensure compulsory compliance to the rules determined by regulatory authorities or markets in other jurisdictions in which you execute transactions.

3.6 Currency risks
Profits and losses of transactions with contracts redenominated in a foreign currency that differs from the currency of your account are affected by exchange rate fluctuations when converted from the contract currency to the account currency.

3.7 Trading systems
The majority of usual “voice” and electronic trading systems use computer devices for routing orders, balancing operations, registering and clearing transactions. As with other electronic devices and systems, these are subject to temporary failure and faulty operation. Your chances for reimbursement of certain losses may depend on the limits of liability determined by the supplier of the trading systems, markets, clearinghouses and/or dealing firms. Such limits may vary; it is necessary for you to get detailed information from the dealing firm on this matter.

3.8 Electronic trading
Trading executed using any Electronic Communications Networks may differ not only from trading on any usual “open-outcry” market, but also from trading where other electronic trading systems are used as well. If you execute any transactions on an Electronic Communications Network, you bear the risks specific to such system, including the risk of a failure in the operation of the hardware or software. System failure may result in the following: Your order may not be carried out in accordance with instructions; an order may not be executed at all; it may be impossible to continually receive information on your positions, or to meet margin requirements.

3.9 Over-the-counter operations
In a number of jurisdictions, firms are allowed to carry out over-the-counter operations. Your dealing firm may act as counterparty for such operations. The special feature of such operations lies in the complexity or impossibility of closing positions, estimating values, or determining the fair price or exposure to risk. For the aforementioned reasons, these operations may be connected with increased risks. The regulation governing over-the-counter operations may be less strict or provide a particular regulatory mode. You will need to become familiar with the rules and risks connected therewith, prior to executing such operations

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