Foreign Exchange Margin Trading

The following is an important notice to customer from the Bank and the customer is advised to read this carefully:

The risk of loss in trading in foreign exchange without full payment either on spot or forward contracts can be substantial. You, the customer, should therefore carefully consider whether such trading is suitable for you in the light of your financial position and investment objectives. In considering whether to trade, you should be aware of the following:-

1. Risk of Trading in Leveraged Foreign Exchange Contracts - The risk of loss in leveraged foreign exchange trading can be substantial. You may sustain losses in excess of your initial margin funds. Placing contingent orders, such as "stop-loss" or "stop-limit" orders, will not necessarily limit losses to the intended amounts. Market conditions may make it impossible to execute such orders. You may be called upon at short notice to deposit additional margin funds. If the required funds are not provided within the prescribed time, your position may be liquidated. You will remain liable for any resulting deficit in your account. You should therefore carefully consider whether such trading is suitable in light of your own financial position and investment objectives.
2. Risk of Margin Trading - The risk of loss in financing a transaction by deposit of collateral is significant. You may sustain losses in excess of your cash and any other assets deposited as collateral with the licensed or registered person. Market conditions may make it impossible to execute contingent orders, such as "stop-loss" or "stop-limit" orders. You may be called upon at short notice to make additional margin deposits or interest payments. If the required margin deposits or interest payments are not made within the prescribed time, your collateral may be liquidated without your consent. Moreover, you will remain liable for any resulting deficit in your account and interest charged on your account. You should therefore carefully consider whether such a financing arrangement is suitable in light of your own financial position and investment objectives.
3. Risk Associated with the Foreign Exchange Market - The prices of foreign exchange are volatile. You should recognize that the prices of foreign exchange as well as the value of your investment may go down as well as up. Losses may be incurred rather than profit made as a result of entering into any FXMT contract.
4. Liquidity Risk - Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the price moves over the permissible range as stipulated by an exchange. In these circumstances, your loss will not be limited to your margin and may be a substantial amount in addition.
5. Risk Related to Forward Contract - A position involving purchase of one delivery month against sale of another delivery month may not be less risky than an outright purchase or sale.
6. Leverage Risk - The high degree of leverage which is often obtained in foreign exchange margin trading with the small margin requirements can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
7. Foreign Exchange Risk - Foreign exchange rates are highly volatile and are influenced by, among other things, changing supply-demand relationships; trade, fiscal, monetary, political and economic events and policies; changes in national and international interest rates and inflation; currency devaluation; and sentiment of the market place. All trades under our FXMT are settled in USD. If your trade is denominated in a currency other than USD, you will also be exposed to fluctuations in the prevailing exchange rate between such currency and USD when your trade is settled, or when your outstanding positions are closed. Where the settlement currency is not your home currency, you will be subject to further risk concerning the exchange rate fluctuation between the settlement currency and your home currency.
8. Exchange Control - For currencies subject to exchange controls imposed by the relevant governments, such as Renminbi (RMB), the exchange rates may be easily affected by change in government policies. Such currencies may have different exchange rates quoted in different markets. For example, the onshore rate of RMB is being referred as "CNY" and the offshore rate (i.e. when traded in Hong Kong) is being referred as "CNH". Although CNY and CNH represent the same currency, they do not necessarily have the same exchange rate and may not move in the same direction.
9. Interest Rate Risk - You are exposed to the interest rate risk of the underlying currencies when entering into a foreign exchange contract. Both spot and forward rates will be affected by the interest rate movements, or anticipations over such movements. In addition, if your transactions are held overnight, you may be subject to an interest expense.
10. Credit Risk - You are subject to the creditworthiness of the Bank in relation to the foreign exchange contracts. If the Bank becomes insolvent or goes into liquidation or defaults on its obligations under the foreign exchange contracts while it is / they are still outstanding, you will rank as unsecured creditors of the Bank and could, in the worst case, lose all your margin funds irrespective of the performance of the foreign exchange contracts and the terms of the Foreign Exchange Margin Trading Agreement you entered into with the Bank.
11. Risks Related to Market Disruption Events - The Bank is not liable for any failure or delay to meet its obligations due to any causes beyond its control which shall include local or international happenings such as Government act, flood, fire, civil commotion, strike, war or any other causes beyond the reasonable control of the Bank, mechanical failure, power failure, malfunction, breakdown, interruption or inadequacy of equipment or installation or other cause which results or is likely to result in the erratic behavior of foreign exchange prices, the closure of the markets or any other cause affecting the operation of the foreign exchange contracts and / or the FXMT account.
12. Conflict of Interest - Potential conflicts of interest may arise from the different roles played by the Bank, its subsidiaries and / or its affiliates in connection with the Foreign Exchange Margin Trading. The Bank and / or its subsidiaries and / or its affiliates may enter into, adjust or unwind transactions relating to the relevant currencies, whether for its or its subsidiaries' or its affiliates' proprietary accounts or for account under management or to facilitate transactions on behalf of investors or otherwise. In carrying out these roles, the Bank's economic interests and those of its subsidiaries and / or its affiliates are potentially adverse to the investors' interests in the Foreign Exchange Margin Trading.
13. Risks Related to the Market Information - Commentaries, financial information and data are, unless the context requires otherwise, for reference only and are not intended as investment advice or for trading or other purposes. Information or other communication, including market research and commentary, may be provided by the Bank or other persons or compiled by the Bank from information and materials provided by other persons. The Bank cannot guarantee the accuracy, truth, reliability, adequacy, timeliness or completeness of any commentaries, financial information or data.
14. Off-exchange Transactions - In some jurisdictions, and only then in restricted circumstances, firms are permitted to effect off-exchange transactions. The firm with which you deal may be acting as your counterparty to the transaction. It may be difficult or impossible to liquidate an existing position, to assess the value, to determine a fair price or to assess the exposure to risk. There is no centralized pricing source and the price of the FXMT transaction is determined by the firm or negotiated with the client. 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 familiarize yourself with applicable rules and attendant risks.

This brief statement cannot, of course, disclose all the risks and other aspects of trading in foreign exchange. You should accordingly obtain independent expert financial and legal advice before entering into the Foreign Exchange Margin Trading Agreement and before trading you should carefully study the market and obtain independent advice again.

Unless the context requires otherwise, this document does not constitute any offer, invitation or recommendation to any person to enter into any investment transaction nor does it constitute any prediction of likely future movements in prices of any investment products.

The above information has not been reviewed by the Securities and Futures Commission or any regulatory authority in Hong Kong.

This service / product is not targeted at customers in the European Union.

To borrow or not to borrow? Borrow only if you can repay!

Disclaimer: This document is intended for information and discussion purposes only, unless the context requires otherwise. The Bank and its affiliated companies make no representation as to its accuracy or completeness, and it should not be relied upon as such. The information is based on market conditions and is subject to change without notice. Unless the context requires otherwise, this document and the information contained herein do not constitute and should not be regarded as an offer by the Bank to you to trade in FXMT on such terms as set out above. Further, this document has not been prepared to be suitable for any particular person or class of persons, and the Bank makes no recommendation to any class of persons. You should carefully consider whether FXMT mentioned herein are appropriate for you in view of your risk appetite, investment experience, objectives, financial resources and circumstances, and make other investigation as you deem necessary. The Bank, its affiliated companies and any of its / their directors and / or employees may have a position or otherwise be interested in any transactions, securities, commodities and / or investment products that are directly or indirectly the subject of this document. Past return is no indication of future performance. The price of securities / investment products / rate of exchange may go up as well as down, and may sometimes fluctuate dramatically. The possibility of incurring investment losses is as likely as that of making profit. The Bank and its affiliated companies accept no liability whatsoever for any direct or consequential losses arising from the use of this document or its contents except such losses as may directly and primarily arise from the Bank's negligence or willful default. Investors should consult their relationship managers or relevant staff of the Bank about the details of product features and risks. This document, or any part of it, may not be reproduced, distributed or published by any recipients for any purposes.