Risk Disclosure
Following is the Risk
Disclosure by VBS Financial Securities (hereafter referred to as “VBS Financial
Securities”).
You (the client or
prospective client) are provided this disclosure in compliance with the rules
and regulations in Montenegro as you suggest to undertake dealings in financial
instruments in the forms of Foreign Exchange Contracts (“FX Contracts”) and/or
Contracts for differences (“CFDs”) with VBS Financial Securities.
The disclosure is to
help you apprehend the essence and risks associated with the above-mentioned
financial products and services. All Clients and prospective clients should
carefully read this document before applying for a trading account and trading.
However, it should be noted that this document does not disclose or explain all
the risks and other significant aspects involved in dealing with Financial
Instruments. The disclosure is to explain in general terms the nature of risks
involved when trading Financial Instruments on a fair and non-misleading basis.
General Risk Warning
Regarding Complex Financial Instruments (Derivative Financial Instruments such
as CFDs)
Trading CFDs and FX
Contracts is highly speculatory, implicates significant risk of loss, and is
not appropriate for all and only for those who:
iii) financially able to
bear losses significantly above margin or deposits because investors may lose
the totality of a contract, not just the margin or the deposit.
Neither CFDs nor FX
Contracts are appropriate investments for retirement funds. CFD and FX
transactions are among the riskiest investments and can result in considerable
losses. Customer represents, warrants and agrees that Customer understands
these risks, is willing and able, financially and otherwise to assume the risks
of trading CFDs and FX Contracts and that the loss of Customer’s entire account
balance will not change Customer’s lifestyle.
You must not commit to
this form of investing unless you comprehend the nature of the transaction you
are about to enter and the true scope of your exposure to the risk of loss.
Your profit and loss
will vary to the extent of fluctuations underlying market pricing on which the
trade is based, and losses could exceed your initial deposit. If you have any
doubt you should seek independent advice.
The purpose of
transactions is to ensure a profit or evade a loss by reference to the
underlying market pricing. In the context these activities, the underlying tool
may be;
a security, a basket of
securities, a securities index, exchange rate of two currencies, a treasury
product, a bullion, a commodity, or such other investment as agreed in writing.
It is a term of each
Transaction that:
You maybe called to
deposit a substantial more margin at short notice to maintain a position. If
you do not provide such additional funds within the time required, your
position may be closed at a loss, and you will be liable for any resultant
deficit. You should monitor your positins closely and always have access to our
platforms when you have open positions or pending orders.
Risks related to long
CFD positions, i.e. for purchasers of CFDs
Being long in CFD means
you are buying the CFDs on the market by assuming that the market price of an
asset will rise between the time of the purchase and sale. As the owner of a
long position, you will typically make a profit if the price rises while your
CFD long position is open. Otherwise, you will generally make a loss, if the
market price falls while your CFD long position is open. Your potential loss
may therefore be larger than the initial margin deposited. Additionally, you
might suffer a loss due to the closure of your position if you do not have
enough liquidity for the margin on your account to maintain it open.
Risks related to short
CFD positions, i.e. for sellers of CFDs
Assuming a short
position in Contracts for Difference (CFD) entails the sale of CFDs with the
expectation that the market price will decrease between the time of purchase
and sale. As the holder of a short position, profit is generally realized if
the price decreases while the CFD short position is open. Conversely, a loss is
generally sustained if the market price increases while the CFD short position
is open. The potential loss may exceed the initial margin deposited.
Additionally, a loss may also be incurred as a result of the closure of the
position due to insufficient liquidity to maintain the margin requirements on
the account.
Cash Settlement
The customer
acknowledges that the settlement of Contracts for Difference (CFD) and foreign
exchange (FX) transactions will be conducted solely in cash, with the final
outcome of the investment being influenced by the difference between the
purchase and sale prices.
Not Advice
Our services are
provided on an execution-only basis and do not include investment, tax, legal,
regulatory, or financial advice. The information we provide is factual in
nature and does not take into account your personal circumstances such as
available funds and risk tolerance. We may provide factual market information
or information regarding a specific transaction, including potential risks and
methods for minimizing those risks. The decision to utilize our products is
made solely by the client, and it is recommended that independent professional
advice is sought from a qualified advisor on any investment, financial, legal,
regulatory, tax, or related matters prior to engaging with us.
Currency Risk
Investing in foreign
exchange (FX) Contracts and Contracts for Difference (CFDs) with underlying
assets denominated in a currency other than the investor’s base currency
entails currency risk. This
is because the
settlement of the CFD or FX Contract in a currency other than the base currency
may impact the value of the return when it is converted back to the base
currency.
Gapping
Gapping, also known as
slippage, refers to a situation where the market moves past a specified Stop
Loss level. This can occur due to increased volatility in the underlying
market, which may temporarily halt trading and then reopen at a price below the
Stop Loss level. In such cases, the Stop Loss may not be effective, and the
position will be closed at the prevailing quote from VBS Financial Securities.
It is important to be
aware of the potential for gapping when holding open positions in a volatile
market environment.
Accordingly, where you
have an open position in a volatile market environment you must understand the
potential impact of Gapping.
Advice and Recommendations
The company will not
provide the client with any form of investment advice, including advice on the
suitability of a specific transaction. The client understands that the services
offered by the company do not include providing investment advice for contracts
for difference (CFDs) or the underlying markets. The client will be solely
responsible for entering into transactions and making decisions based on their
own judgment.
In any transaction the
client represents that they have conducted their own independent research and
investigation into the risks associated with the transaction and have
sufficient knowledge, market sophistication, professional advice, and
experience to evaluate the merits and risks of the transaction. The company
does not provide any warranty regarding the suitability of products traded
under this agreement and does not have a fiduciary duty towards the client.
The company will not be
obligated to provide the client with legal, tax, or other advice related to the
transaction. The client should seek independent expert advice if they have any
doubts about potential tax liabilities. The client is advised that tax laws are
subject to change.
The company may, at its
discretion, provide the client with information, news, market commentary, or
other information, but this is not considered a service. This information may
be provided through newsletters posted on the company’s website or provided to
subscribers via the website or trading platform.
Where it does so:
It should be noted that
any market commentary, news, or other information provided or made available by
the company is subject to change and may be withdrawn at any time without
notice.