OD Markets Risk Disclosure Statement

ODM Risk Disclosure Statement

This OD Markets Ltd. (‘ODM’) Risk Disclosure Statement is an integral term of the Customer Agreement.

THE MAJORITY OF GLOBAL FOREIGN EXCHANGE CURRENCY DEALERS AND BANKS INCLUDING ODM, ARE COMPENSATED ON THE DIFFERENCE BETWEEN THE BID/ASK SPREAD IN THE CURRENCY PRICE OFFERED TO PARTICIPATING TRADERS AND/OR HAVE THE ABILITY TO ACCUMULATE POSITIONS ON A PROPIETARY BASIS AND ASSUME THE RISK OF THE NET OPEN POSITIONS THEY CARRY. THE FOREIGN CURRENCY TRADING YOU ARE ENTERING INTO IS NOT CONDUCTED ON AN EXCHANGE. ODM IS ACTING AS A COUNTERPARTY IN THESE TRANSACTIONS AND THEREFORE ACTS AS THE BUYER WHEN YOU SELL AND THE SELLER WHEN YOU BUY. AS A RESULT, ODM’S INTERESTS MAY BE IN CONFLICT WITH YOURS. UNLESS OTHERWISE SPECIFIED IN YOUR WRITTEN AGREEMENT WITH ODM OR OTHER WRITTEN DOCUMENTS ODM ESTABLISHES THE PRICES AT WHICH IT OFFERS TO TRADE WITH YOU. THE PRICES ODM OFFERS MIGHT NOT BE THE BEST PRICES AVAILABLE FROM AMONGST DIFFERENT PROVIDERS AND ODM MAY OFFER DIFFERENT PRICES TO DIFFERENT CUSTOMERS BASED ON OBJECTIVE CRITERIA.

IF ODM ELECTS NOT TO COVER ITS OWN TRADING EXPOSURE, THEN YOU SHOULD BE AWARE THAT ODM MAY MAKE MORE MONEY IF THE MARKET GOES AGAINST YOU. ADDITIONALLY, SINCE ODM ACTS AS THE BUYER OR SELLER IN THE TRANSACTION, YOU SHOULD CAREFULLY EVALUATE ANY TRADE RECOMMENDATIONS YOU RECEIVE FROM ODM OR ANY OF ITS SOLICITORS.

Each capitalized term not defined in this Risk Disclosure Statement shall have the meaning given to it in the ODM Glossary of Terms obtained from the ODM website: www.odmarkets.com. Trading in margined Foreign Exchange and/or Precious Metals involves a high degree of risk including the risk of loss of the Customer’s entire Risk Capital deposited with ODM. Losses, in some cases, have the potential to extend beyond the Customer’s Account Value.

This brief statement does not disclose all of the risks and other significant aspects of spot Foreign Currency, Precious Metals and options trading. In the light of the risks, you should undertake such transactions only if you (“Customer” or “you”) understand the nature of the trading in which you are about to engage and the extent of your exposure to risk. Trading in spot OTC Foreign Exchange is not suitable for many members of the public. You should carefully consider whether such trading is appropriate for you in the light of your experience, objectives, financial resources and other relevant circumstances.

In consideration of ODM agreeing to enter into Foreign Exchange Contracts with you for this Account, ODM requires you to analyze your financial objectives, financial status, investment constraints and tax situation to determine whether spot OTC Foreign Exchange, Futures, Options, CFD trading is suitable for you. In addition, we require you to read and acknowledge the ODM Risk Disclosure Statement that outlines without limitation some of the risks associated with trading margined spot OTC Foreign Exchange through ODM.

By signing this document, you acknowledge, understand and agree to the following:
There is no guarantee of profit from trading with ODM. By signing the ODM Risk Disclosure Statement, you acknowledge that neither ODM nor any of its representatives guarantees to you that you will profit from trading or investing in OTC margined spot Foreign Exchange. You further confirm that you can sustain the total loss of your entire Risk Capital deposited in your Account and are financially able to withstand any losses incurred.

OTC margined spot Foreign Exchange trading involves a high amount of risk and is highly speculative. By signing the Risk Disclosure Statement, you agree that they are in full understanding and are willing to assume the legal, economic, and other risks associated with trading in margined OTC spot Foreign Exchange, and are willing and able to assume the loss of your entire Risk Capital, defined as those funds, that if lost, would not change your lifestyle or your family’s lifestyle. As such, you further agree that margined spot OTC Foreign Exchange trading may not be suitable for retirement funds. ODM encourages Customers to closely manage outstanding open positions and to use prudent money management precautions such as, but not limited to, Stop Loss Orders.

Excessive leverage available with OTC margined spot Foreign Exchange can lead to quick losses. By signing the Risk Disclosure Statement, the Customer agrees that using a high degree of leverage, defined as the use of a small amount of capital to control a larger amount in an Open Position, can result in large losses due to a price change(s) of open Foreign Currency positions with ODM. ODM provides leverage on most Currency Pairs for most customers of 100:1. For example, with 100:1 leverage, the Customer has the potential to control a $500,000 position with $5,000 in an Account. ODM encourages each of its Customers to use only that portion of leverage that such Customer is most comfortable with and to use money management precautions such as, but not limited to, Stop Loss Orders for the purpose of managing risk. ODM reserves, at its sole discretion, the right to reduce or increase the amount of leverage given on any Currency Pair at any time and without notice.

OTC margined spot Foreign Exchange trading experiences periods of substantial liquidity risk. By signing the ODM Risk Disclosure Statement, each Customer acknowledges that liquidity risk, resulting from decreased liquidity of a currency pair, is usually due to unanticipated changes in economic and/or political conditions. Each Customer also acknowledges that Liquidity Risk can affect the general market in that all participants experience the same lack of buyers and/or sellers. Each Customer also understands that liquidity risk can be ODM specific due to changes in liquidity available to ODM from ODM’s inter-bank liquidity providers or specific to retail Foreign Exchange market makers due to a perception that the risks of the market segment have increased. When liquidity decreases, Customers can expect, at the minimum, to have wider bid to ask spreads as the supply of available bid/ask prices, outstrips the demand. Decreases in liquidity can also result in “Fast Market” conditions where the price of a currency pair moves sharply higher or lower or in a volatile up/down pattern without trading in an ordinary step-like fashion. In some instances there may exist the possibility that a trading bid and/or ask price for a Foreign Exchange pair or pairs is not available (a situation where there is no liquidity). Although there may be instances when the aggregate OTC spot Foreign Exchange market enters a “Fast Market” situation or periods where liquidity is in short or no supply, it is important to note that, ODM’s prices, bid/ask spreads and liquidity will reflect the prevailing inter-bank market liquidity for ODM.

ODM will liquidate Customer positions that are not adequately margined. Because of the leverage available with OTC margined spot Foreign Exchange trading and the potential for extreme volatility, ODM reserves the sole discretionary right to liquidate a Customer’s Account should the Margin in the Account not be sufficient to cover the potential risk of loss. Required margin levels are indicated on ODM’s trading platforms. Should a Customer’s Account value go below the Liquidation Level, ODM reserves the right to automatically Liquidate the customer’s position and the Customer will be responsible and liable for all resulting losses as a result of such liquidation. ODM reserves the right to change the Liquidation Level at its sole discretion.

Prices from ODM are independent of prices of other institutions and businesses. By signing the ODM Risk Disclosure Statement, each Customer acknowledges that the prices reported by ODM for buying and selling currency pairs are independent and can differ from the prices displayed elsewhere or from those of other liquidity providers in the Interbank Market. Differences can result from, but are not limited to, changes in liquidity from Interbank market makers to ODM, an unbalanced position or exposure in currency pairs at ODM, or differing expectations of price movements in currency pairs by ODM. ODM expects that in most cases the prices provided to its Customers will be in line with the general Inter-bank Market but ODM does not represent, warrant or covenant, explicitly or implicitly, that this will always be the case.

Rollover rates for open positions of currency pairs are determined by ODM and are independent of prices found elsewhere in the Interbank Market. By signing the ODM Risk Disclosure Statement, each Customer acknowledges that all existing spot open positions that remain open over the end of business day (defined as 5:00 p.m. New York), are automatically rolled over to the next available Spot Settlement Date at a net debit or credit to a Customer’s Account as determined by spot interest rates determined solely by ODM. In general, if a Customer is long (has bought) on a currency that has a higher spot interest rate than the currency on which such Customer is short (has sold); such Customer can expect a net credit added to the Customer’s Account Value at the end of day. If a Customer is short (has sold) a currency that has a higher spot interest rate than the currency on which such Customer is long (has bought), such Customer can expect a net debit subtracted from the Customer Account Value at the end of the day. Rollover debits and credits are also influenced by the number of days that the position must be to be rolled. For positions that must be rolled from a Spot Settlement Date of Friday to Monday, the debit or credit will reflect the rollover from Friday to Monday, or three (3) business days. For rollovers from Monday to Tuesday, Tuesday to Wednesday, Wednesday to Thursday and Thursday to Friday, the rollover debit or credit is for only one (1) business day. If there is a holiday and ODM is closed, the rollover would include the holiday. For example, if Tuesday is a holiday, rollovers from Monday will be two (2) business days (i.e. from Monday to Wednesday). Since rollover debits and credits are determined by the respective short-term spot interest rates of the respective currencies that make up a currency pair, a large spread between one currency’s rate in relation to another can cause a large debit or credit rollover amount. This spread can result, but is not limited to a country’s tightening of credit conditions in order to dissuade speculators from shorting a currency versus another. For example, the Bank of England in the early 1990’s raised short-term interest rates to over 20% in an attempt to dissuade currency speculators from selling Pound Sterling against other currencies when the Pound Sterling came under pressure by speculators. In this situation, those who were short GBP and long US Dollars were forced to rollover their spot positions at a large debit from one spot settlement date to the next. By doing so the Bank of England was attempting to dissuade currency speculators from selling GBP over spot and rolling over the position from one day to the next. The action was intended to force those who were short GBP, to cover their positions before the end of the day forcing an underlying bid into the currency. Year-end and quarter-end periods can also cause unusual spikes in short-term interest rates that may cause temporary spikes in rollover debits and credits. Each Customer acknowledges that there exists a rollover risk to currency positions. ODM will display the rollover debits or credits for the respective currency pairs on its web site (www.odmarkets.com) and automatically periodically update Customer Reports to reflect the cash flow. ODM reserves the right to change the credits or debits at its sole discretion if the original amounts are in wrong due to an error or omission.

Sweep rates for currency balances other than USD are determined by ODM and may be independent of prices found elsewhere in the Interbank Market. Profits that are calculated in a Foreign Currency are “swept” into dollars when the open positions are closed and the Profit and Loss realized. For example, if a Customer buys one (1) lot of USD/JPY at 115.00 and sells the same one (1) lot at 116.00, the realized profit on the transaction would be:

Sale Proceeds in Yen      =                11,600,000 Yen
Less:                        Purchase Proceeds in Yen =         11,500,000 Yen
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Realize Profit of the Trade =         100,000 Yen
Since the Realized Profit is in Yen, the amount must be swept into US dollars by selling Yen and Buying USD. If the exchange rate for the USD/JPY exchange rate is 116.05, the 100,000 Yen are converted and swept into USD at 116.05 creating a USD realized profit of $861.70 (100,000 / 116.05 = $861.70). When dealing in currencies where the secondary currency is USD (i.e., EUR/USD and GBP/USD), the realized profit or loss is already stated in USD. As a result, the profit or loss does not have to be swept.

There is no guarantee that ODM will be able to execute Stop Loss Orders, Limit Orders or OCO orders at the price the Customer designates. Customer acknowledges and agrees that there may be market, liquidity or other conditions that will prevent ODM from executing a Customer’s specific Stop Loss Orders, Limit Orders or OCO Orders at the Customer designated price. In some cases the orders will be executed at prices that are less favourable to the price entered and desired by the Customer. The Customer acknowledges and agrees that the Customer is still responsible and liable for deals executed at levels different from their orders and that ODM is not liable for failure to do so.

There is a technology risk inherent in trading online or via a software application and the Customer accepts that risk. ODM has invested resources developing, testing, configuring, and integrating the ODM Internet Trading Platform, and other relevant software and hardware. However, the Customer acknowledges and agrees that ODM does not guarantee that the Customer will be able to successfully execute, deal, monitor their positions, or perform other essential trading tasks while using the public Internet and other technology from ODM or from third party vendors known or not known on which ODM may rely. ODM cannot control, without limitation, the routing, Internet connectivity, reliability of customer or ODM equipment, network connections or any other technology hardware malfunction caused by ODM hardware, hardware and connectivity that makes up the public Internet, or hardware at the Customer’s location. ODM does not guarantee, although reasonable efforts have been made, that the ODM Internet Trading Platform and Associated Back Office and Broker Software Interfaces or any other code or application including but not limited to the interface with ODM liquidity provider(s) or the interface with the escrow account institution or other technology application that would come under the heading software, are free of programming bugs that can cause trading, position keeping or any other required functionality of the ODM Internet Trading Platform and other relevant software applications associated with ODM including but limited to clearing, market making and escrow account software from becoming inoperable or without errors.

The Customer necessarily assumes a failure of communication risk. Although ODM will have qualified representatives available by telephone during business hours to accept and execute Customer Market Orders, there exists the risk that the Customer will not be able to contact or make contact with the ODM representative due to, but not limited to, communication malfunction, an overabundance of telephone orders, or any other malfunction or negligence. The Customer acknowledges and agrees that Customer will hold harmless ODM for any loss or missed trading opportunity resulting from any communication problems the Customer may encounter.
ODM does not take responsibility for third party account managers and Customer agrees to hold harmless ODM, its employees, agents, officers, directors and shareholders from any losses sustained by Customer as a result of actions undertaken by such third party account managers. Should a Customer grant a third party account manager discretionary trading authority, the Customer grants such authority for the Customer’s Account at its sole and full risk.

ODM reserves the right to correct any deals executed on misquoting errors. In the case when a quoting error occurs that results in a Customer deal executed at an off-market price, ODM reserves the sole discretionary right to make the necessary corrections and adjustments to the Customer’s Account whether it be in the favour of the Customer or not in the Customer’s favour. Any change will be reported to the Customer via an electronic method such as but not limited to e-mail.

All market recommendations made by ODM or any representative of ODM are for informational purposes only. Any decision by the Customer to buy or sell a Foreign Currency Pair is an independent decision by the Customer. Market recommendations made by ODM or a representative of ODM do not constitute an offer to sell or buy any Foreign Currency pair from ODM or from any other source that may provide dealing prices to the Customer. ODM and its employees are not investment or trading advisor(s) and have no fiduciary duty to the Customer and are therefore not liable for any losses on trades and for any losses incurred by the Customer as a result of information or any recommendations made by ODM or any representative of ODM.

Customer is at risk if ODM should go out of business. There is no guarantee that ODM as a business will be profitable. Consequently, there exists a credit risk that ODM may be subject to losses, which could, in turn, jeopardize the capital that the Customers have in their Accounts. Customer acknowledges that in the event of insolvency, the Customer can only look to ODM for performance and return of all collateral and Margin that the Customer may have at ODM.

ODM may decide to exit the OTC margined Foreign Exchange business. ODM may in its sole discretion decide that it does not want to continue to participate as a market maker in OTC Margined Foreign Exchange Trading. As a result, the Customer agrees and acknowledges that ODM may liquidate all Customer positions, and return margined funds to the Customer at the sole discretion of ODM, at any time and for any reason. ODM’s Customers shall not hold ODM liable for any loss as a result of liquidation of the Customer’s position either on an actual basis or as a result of missed profit opportunities.

Customers are responsible for any reporting errors. In case of Reporting and Confirmation errors or omissions, and/or errors in details of transactions including but not limited to the price at which deals were executed, the currency pair traded, the market direction (i.e., “buy” or “sell”) of order, the type of order and/or any errors in fees, charges or credits to the Customer’s Account, including but not limited to charges for executing a transaction, wiring funds, rolling over position, and/or sweeping Foreign Currency balances into the home currency, the Customer shall notify ODM immediately upon discovery for review. In addition, the Customer is responsible for submitting details of any errors in writing to ODM and sending the complete details to ODM Markets Ltd. Attn: Customer Objections, 41, Shortland Street, Plaza Level, Auckland or Millennium City 1, 388 Kwun Tong Road, KwunTong, Kowloon, Hong Kong. Notice shall be deemed received only if actually delivered or mailed by registered mail, return receipt requested or by private courier with a receipt.

Deals executed over the telephone have inherent risks. ODM will accept Market Orders for deals done over the telephone and, at ODM’s discretion other types of orders may be accepted. Telephone deals are considered executed when the ODM representative says, “done” and relays the complete deal details. Any given price by an ODM representative over the telephone prior to execution is deemed to be an indicative price. ODM reserves the right to change the indicative price given over the phone if the actual dealing price is different due to market conditions, misquote or volatility. ODM is not responsible for Customer telephone orders if the Customer cannot be heard or understood by the ODM representative due to, without limitation, accent, speech defect, faulty connection, or excessive background noise at the Customer’s location or at ODM. To better ensure execution, ODM requires that Customers communicate in English when giving orders. ODM cannot guarantee that telephone orders given in a foreign language will be executed. For best results and fast execution, the following procedure will be used. The Customer will first be asked by the ODM representative the following Account Information: The Customer’s ODM User Name, Account Number and/or other identifying features. Only after the ODM representative confirms the Customer’s identity, the Customer should relay the following order information: the execution direction to Buy or Sell, the number of lots, and the desired currency pair. The ODM representative will repeat the order information for the Customer to confirm. For example the ODM Representative may say the following, “Buy 2 lots of EUR vs. USD at the Market. Confirmed?” By saying, “Yes” the order will be executed at the Market and the details -immediately given to the Customer after execution. The ODM representative will enter the deal into the Customer’s Account. The details and effects of the deal will be reflected in the customer’s online reports. ODM does not warrant that deals done over the telephone will be done at prices that mirror the prices displayed electronically at that time over the ODM Internet Trading Platform. Although currently not planned, ODM reserves the right to charge a commission for deals done over the telephone. Should ODM charge a commission for telephone deals, it will be reported on the ODM Website and be reflected as a line item debit in the Customer’s ODM Account Reports. All deals and charges done via the phone are final. ODM reserves the right to tape all telephone calls without providing an electronic indicator tone (“beep”) or otherwise advising the Customer that the call is being recorded. ODM is not responsible or liable if the tapes of the telephone calls are erased or never recorded because of error, omission or for any other reason. ODM is also not liable should user name and Account information be obtained knowingly or unknowingly by a third party and as a result, deals done in the name of the Customer without his or her knowledge or authorisation. Customers are responsible for protecting the confidentiality of their user ID and other identifying account information.

Transactions in other jurisdictions include an inherent risk. Transactions on markets in other jurisdictions, including markets formally linked to a domestic market, may expose you to additional risk. Such markets may be subject to regulation, which may offer different or diminished investor protection. Before you trade you should enquire about any rules relevant to your particular transactions. Your local regulatory authority will be unable to compel the enforcement of the rules of regulatory authorities or markets in other jurisdictions where your transactions have been effected. You should ask the firm with which you deal for details about the types of redress available in both your home jurisdiction and other relevant jurisdictions before you start to trade.

Off-exchange transactions. In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect off-exchange transactions and the firm with which you deal may be acting as your counterparty to the transaction. ODM functions as a direct counterparty to Customers in currency transactions. ODM neither offers the right to offset, nor guarantees a market in which to offset. Therefore, it may be difficult or impossible to liquidate a position, to assess its value, to determine a fair price or to assess the exposure to risk. For these reasons, these transactions may involve increased risks. Off-exchange transactions may be less regulated or subject to a separate regulatory regime. Before you undertake such transactions, you should familiarise yourself with the applicable rules and attendant risks.

ODM has limited liability. The Customer agrees and acknowledges that ODM shall not be liable to the Customer for any claims, losses, damages, costs or expenses, including attorneys’ fees caused directly or indirectly by any events, actions or omissions, without limitation, claims, losses, damages, costs and expenses, including attorney’s fees, resulting from civil unrest, war, insurrection, international intervention, governmental action including, without limits, exchange controls, forfeitures, devaluations and nationalizations, natural disasters, acts of God, market conditions, communication problems or any delay, disruption, failure of any transmission or communication system or computer hardware or software application whether supplied and belonging to ODM or from a third party vendor that the Customer and ODM rely on to conduct execution and reporting services.

 

ADDITIONAL RISK DISCLOSURE STATEMENT

It is your responsibility to carefully read all the documents and risk disclosure statements of ODM. You acknowledge that trading futures, options, foreign exchange and/or contract for difference (CFD) and/or Precious Metals trading account with ODM involves a high risk of loss, Since leverage is involved, these losses can be quite substantial and occurs quite quickly, possibly exceeding the funds you have deposited in your account or have allocated as risk capital. You should disregard any suggestions from any source whatsoever that the foregoing risks can be limited, minimized or eliminated.

You agree to immediately report any statements to the contrary made to you by ODM’s personnel, introducing Brokers or Trading Advisors who may be directing the trading activity in your account. The trading of currencies or derivatives like options on currencies involves an extremely high degree of risk of loss and is unsuitable for many individuals. Some researchers have shown that more than eighty percent of investors who trade in options eventually lose money. There is a possibility to lose part or all of the money you deposit in the currency trading account. If any of the criteria above describes your situation, or if you have pursued only conservative forms of investment in the past, we advise you to study the risk of loss involved in currency trading thoroughly before you consider it an appropriate investment for you or you may consider it completely inappropriate and decide to never trade.

Therefore, you should carefully analyse you personal circumstances to determine if foreign exchange trading is suitable for you. If you have decided to trade foreign exchange and/or contract for difference (CFD) and/or Precious Metals please be advised that many industry advisors believe that you should not place more than 20% of your net worth at risk. If at any time your losses exceed 20% of your net worth, you should cease trading immediately. ODM is not responsible to monitor your deposit(s), losses or net worth. ODM has no right to refuse your account if your decision to trade is made with full understanding of the risk of loss. Therefore, we require that you sign and return the enclosed copy of this Additional Risk Disclosure Statement to us in order to indicate that you are fully aware of the substantial risk of loss in trading and accept full responsibility for your decision to trade in the foreign exchange markets.