Market Risk and Online Trading
Trading in or through OTCGOLD involves considerable risks and is not suitable for all investors. Client must study this Risk Disclosure and the contents of this Agreement thoroughly and carefully. Although online trading may be both convenient and efficient, it may add to trading in precious metals additional risks. And, as such, Client must be prepared to accept all risks incidental to the online trading.
Suitable Only for Professional Investors
Trading in or through OTCGOLD is suitable only for specialized institutions or experienced investors whose financial position allows them to afford losses that may well exceed the value of the margins or deposits maintained.
Trading Facilities and Limit of Responsibility
The OTCGOLD business does not require any open call. Though quotations and prices are often given by computer-based systems, such quotations and prices may vary due to market liquidity. Most electronic trading facilities are supported by computer-based systems for order placing, execution and matching of transactions, and are vulnerable to temporary system failure. Client’s ability to recover certain losses may be subject to various limits or exclusion of liability set by the system provider, the bank and/or other financial institution or the clearing house.
IMPERIUM GOLD may be allowed to make OTC transactions. IMPERIUM GOLD may refuse to accept or guarantee any order. As such, it may be difficult or impossible to close a position, to make a value assessment, to determine a fair price or to assess a risk. Moreover, OTC transactions may be less regulated or regulated by a different regulatory system. Before starting any transactions, Client should understand the applicable regulations and the risks involved.
The risks involved in precious metal transactions are very high. Such transactions are leveraged, which means that Client may participate in a transaction agreement of a very high amount with a relatively low amount of initial margin. As such, even a small fluctuation in the market may have a relatively big impact on Client’s investment, which might be good or bad for Client. Client may suffer a loss on its initial margin and any additional funds deposited with IMPERIUM GOLD to maintain its position. If the market goes against Client’s position or its margin level is increased, Client may be unable to pay the necessary additional funds timely to maintain its position which may then lead to its position being closed forcibly. Client shall in such event be responsible for all resulting losses.
Certain orders intended to limit loss to a specified amount or price (e.g. “stop-loss” and “stop-limit” orders) may not take effect or be executed at all. If an order is a stop-limit order, IMPERIUM GOLD makes no guarantee that the order may be executed at the limit or be executed at all. In addition, strategies using combinations of positions, such as spread and straddle positions, may share the same risk as simply taking “long” or “short” positions.
Trading through an electronic trading system may experience or encounter delay or stoppage in sending or receiving any Client instruction or other data or information. System failure may even lead to transactions not being able to be executed in accordance with Client instruction or transactions being executed incorrectly. Client shall accept all risks associated with the use of electronic trading system.
Suspension or Restriction on Trading and Pricing Relationship
Market conditions and the rules of certain markets (including those for or about the suspension of trading) may increase the loss of Client by making it difficult or impossible to carry out an order of transaction or an order for closing a position. Moreover, normal pricing relationship between the relevant assets and the precious metal may become inexistent. With no price reference to the same or similar asset, it would be difficult or impossible to assess or determine a “fair” value of an asset.
Transactions in Other Jurisdictions
Transactions in markets of other jurisdictions (including those markets linked formally to the domestic market) may expose Client to other risks. Under the rules of such markets, Client may be given a different or lesser protection. Client should enquire about the rules and regulations applicable to its intended transactions, and be aware of the protections available in the jurisdiction where Client is situated as well as those in other relevant jurisdictions before trading.
Deposited Cash and Property
Client acknowledges and understands the risks involved in depositing or entrusting any money or other valuable property with IMPERIUM GOLD or its representative or authorized person. Client should get itself aware of the protections and remedies available in respect of money or other valuable property so deposited or entrusted for any domestic or foreign transactions, especially in case of where the company with which the money or other valuable property is deposited or entrusted has become insolvent or bankrupted. The extent to which Client may recover its money or property will be governed by rules and regulations of the place in which the company is situated and the process of recovering the same can be very lengthy.
Creditworthiness of Counterparty
IMPERIUM GOLD gives no warranty or guarantee on any creditworthiness of the counterparty to any transaction. IMPERIUM GOLD will make every effort to deal with reputable, reliable institutions and clearing houses. Apart from that, Client must accept and understand the possibility of it not being able to close a position and suffering a considerable loss by reason of a drop in the trading liquidity.
Margin and Call of Additional Fund
IMPERIUM GOLD’s margin policy may require Client to provide additional funds to properly maintain its margin account. Client shall have the obligation from time to time to timely meet such margin requirement, failing which any open position may be closed automatically with a corresponding loss. IMPERIUM GOLD also reserves the right to refuse to accept any order or provide a market offset.
Risk of Exchange Rate
All trading under IMPERIUM GOLD’s trading account shall be done in US dollars or such other currency from time to time approved by IMPERIUM GOLD. If Client makes any deposit or withdrawal in any other currency than the US dollar, any profit or loss arising from a fluctuation in the exchange rate shall be borne solely by Client. Client further agrees that IMPERIUM GOLD may in such manner and at such time as it may see fit make any currency exchange for or in its performance of or exercise of its rights under this Agreement.
Client shall fully observe the local laws and regulations and pay all taxes, duties and other moneys payable in the territory or jurisdiction in respect of all transactions executed for or at the direction of Client through IMPERIUM GOLD’s platform. The execution of any transaction through IMPERIUM GOLD’s platform will be deemed to constitute a representation and warranty of Client to IMPERIUM GOLD that it will comply with such local laws and regulations.
Seeking Independent Advice from Legal and Other Professionals