Risk Disclosure

AFX Capital Markets Ltd (referred as “AFX” or “we”), with registered office at 73, Ayias Zonis & Tirteou, CY-3090 Limassol, Cyprus, is authorized to provide certain investments services by the Cyprus Securities and Exchange Commission under reference no. 119/10. This notice (the “Risk Disclosure” or the “Notice”) is being provided to you (the “Applicant” or “you”) under applicable law in relation to your proposed entering into an agreement with AFX governing the supply of trading services by AFX to you (the “Agreement”).

This notice does not and could not disclose or explain all of the risks and other significant aspects involved in trading in contracts for differences (“CFDs”) and other financial derivative products but only some selected risks that we believe to be of particular relevance.

You should only engage in CFD trading in precious metals, currencies, indices, oil, commodities and financial instruments if you are prepared to accept a high degree of risk including the risks outlined in this Notice. You must be prepared to sustain the total loss of all amounts you may have deposited with us as well as any such additional losses and charges (such as interest) as are disclosed in the Agreement. You should not deal in CFDs unless you understand the nature of the contracts you are entering into and the extent of your exposure to risk. You should also be satisfied that the contracts are suitable for you in the light of your circumstances and financial position.

Different instruments involve different levels of exposure to risk, and in deciding whether to trade in such instruments the Applicant should be aware of the following points.

1. CFDs
CFDs can be likened to futures which can be entered into in relation to certain indexes, precious metals, oil, commodities or financial instruments. However, unlike other futures, these contracts can only be settled in cash. Investing in a CFD carries risks similar to investing in a future and you should be aware of these. Transactions in CFDs may also have a contingent liability and you should be aware of the implications of this as set out in paragraphs 3 and 5 below.

2. Investing in rolling forex, indexes, precious metals, oil and commodities
Investing in rolling forex, indexes, precious metals, oil and commodities carries similar risks as investing in a future and you should be aware of these. Margined transactions in rolling forex, indexes, precious metals, oil and commodities may also have a contingent liability and you should be aware of the implications of this as set out in paragraphs 4 and 5 below. In addition to standard industry disclosures contained in this Risk Disclosure, you should be aware that margined rolling forex, indexes, precious metals, oil and commodities trading are some of the riskiest forms of investment available in the financial markets and are only suitable for sophisticated individuals and institutions. Given the possibility of losing an entire investment, speculation in the precious metals, indexes, oil, commodities or foreign exchange markets should only be conducted with risk capital funds that if lost will not significantly affect your personal or institution's financial wellbeing.

If you have pursued only conservative forms of investment in the past, you may wish to study rolling forex, indexes, precious metals, oil and commodities trading further before engaging in an investment of this nature. If you wish to engage in this trading activity, you acknowledge that the funds you have committed are purely risk capital and loss of your investment will not jeopardize your style of living nor will it detract from your future retirement program. Additionally, you fully understand the nature and risks of investing in rolling forex, indexes, precious metals, oil and commodities, and your obligations to others will not be neglected should you suffer investment losses.

3. Foreign markets
Foreign markets involve different risks from Cyprus markets. In some cases risks will be greater. The potential for profit or loss from transactions on foreign markets or in foreign currency will be affected by fluctuations in foreign exchange rates. Such enhanced risks include the risks of political or economic policy charges in a foreign media, which may substantially and permanently alter the conditions, terms, marketability or price of a foreign currency.

4. Risk reducing orders or strategies
The placing of certain orders (e.g. “stop loss” or “stop limits” orders) that are intended to limit losses to certain amounts may not always work because market conditions or technological limitations may make it impossible to execute such orders.

5. Contingent liability transactions
CFDs are margined transactions requiring you to make a series of payments against the contract value, instead of paying the entire contract value immediately. You may sustain a total loss of the margin you deposit with AFX to establish or maintain a position. AFX revalues your open positions continuously during each business day, and any profit or loss is immediately reflected in your account and a loss may result in you being called upon to pay substantial additional margin on short notice to maintain your open positions. AFX may also change its rates of initial margin and/or notional trading requirements at any time, which may also result in a change to the margin you are required to maintain. If you do not maintain sufficient margin on your account at all times and/or provide such additional funds within the time required, your open positions may be closed at a loss and you will be liable for any resulting deficit.

6. Leverage
Whilst derivatives instruments can be utilised for the management of the risk, some investments are unsuitable for many investors. CFDs carry a high degree of risk. The gearing and leverage that is obtainable with CFD trading means that you only need to place a small deposit to commence trading with AFX although this small deposit may result in large losses or large gains. Highly leveraged transactions are subject to significant changes in value as a result of relatively small changes in the value or level of an underlying or related market factor.

7. Over the Counter Transactions
When trading CFDs you speculate on the anticipated price change for a particular underlying. This trading does not occur on a regulated market. You will enter directly into a contract with AFX in respect of the financial instrument or other underlying you wish to trade under a CFD. All open positions with AFX must be closed with AFX and can not be closed with any other party. Trading in OTC financial transactions may expose you to greater risks than trading on a regulated market because there is no market on which to close out your open positions. OTC transactions may increase the liquidity risk and introduce other significant risk factors: it may be impossible, for example, to assess the value of a position resulting from an off-market transaction or to determine the risk exposure. Also, bid prices and offer prices need not be quoted by AFX and, even where they are, AFX may find it difficult to establish a fair price particularly when the relevant exchange or market for the underlying is closed or suspended.

8. Prices
The prices posted on the AFX platform (the “Platform”) may not necessarily reflect the broader market. AFX will select closing prices to be used in determining margin requirements and in periodically marking to market the positions in your account and closing out such positions. Although AFX expects that these prices will be reasonably related to those available on what is known as the interbank market or any appropriate exchange or other financial market (the “Reference Market”), prices AFX uses may vary from those available to banks and other participants in the Reference Market. Consequently, AFX may exercise considerable discretion in setting margin requirements and collecting margin funds.

9. Weekend risk
Various situations, developments or events may arise over a weekend when the markets generally close for trading, that may cause the markets to open at a significantly different price from where they closed on Friday afternoon. You will not be able to use the Platform to place or change orders over the weekend 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 over the weekend will be executed at levels significantly worse than their specified price.

10. Electronic trading
Trading in OTC contracts through the Platform may differ from trading on other electronic trading systems as well as from trading in a conventional or open market. You will be exposed to risks associated with the electronic trading system including the failure of hardware and software and system down time, with respect to the Platform, your systems and the communications infrastructure (for example the internet) connecting the Platform with you.

11. Intraday Trading
Online intraday trading can lead you to make numerous transactions.

12. Trading suspensions
Under certain conditions it may be difficult or impossible to liquidate a position. This can occur, for example, at times of rapid price movement where the price for an underlying rises or falls during one trading session to such an extent that trading in the underlying is restricted or suspended.

13. Commissions
Before you begin to trade, you should obtain details of all commissions and other charges for which you will be liable, as indicated in the Rates Schedule available on the website of AFX.

14. Insolvency
Any insolvency or default may lead to positions being liquidated or closed out without your consent. Additionally, you will transfer full ownership and title to a portion of all the of money you will deposit with AFX representing an amount necessary to secure your present or future, actual or contingent liabilities to AFX including margin requirements. AFX will determine the amount of money required to secure your obligations to AFX in its sole discretion on a daily basis (based on your daily open positions and trading, taking account of market conditions), which amount may be greater than the margin requirements. You will have no proprietary claim over this amount of money which will not be subject to segregation or other duties pursuant to client money rules in force from time to time under applicable law and may be dealt with by AFX on its own account. Such amount of money may therefore be irrecoverable in the event of an insolvency or default of AFX.