Risk disclosure statement
This brief statement does not disclose all risks of precious metals (including spot gold and spot silver, collectively known as “gold and silver”) and other important aspects. In view of the risk, before the clients start such transactions, they should know something about the nature of the transaction and risk degree faced by clients, and precious metal transaction is not suitable for all the public. Clients must take their own investment experience, purpose, financial resources and risk bearing ability, etc. to carefully consider whether such transaction is suitable for them. The clients should consult legal and other professional advice before opening an account and starting transaction.
Precious metal transaction
1. Precious metal transaction
Precious metal transaction has a very high risk. Compared with the price of precious metals, the amount of initial cash deposit may be relatively small, so this transaction is leveraged. Even if relatively small changes appear on the market, it will have a relatively large impact on the capital that the clients have deposited or will deposit. If the market change is not advantageous to clients or the cash deposit level has risen, clients may not be able to timely increase cash deposit to maintain their positions and be forced to close the position in the case of loss; clients have to be responsible for the losses.
2. Order or strategy to reduce risk
Issuing some orders that aim to limit losses to certain amount (such as “stop-loss” order, or “stop-loss and price-limit” order) may not be agreed or executed. If the order is stop-loss and price-limit order, it can't guarantee the order is carried out with the limit-price. Some use position merge strategy, for example, price difference or the hedge with same prices may have the same risk as "long position" or "short position".
3. Transaction devices
Most open-outcry and electronic trading devices conduct the order transmission, execution, matching, registration and transaction liquidation through the computer-based system. Same as all devices and systems, they are vulnerable to be influenced by a temporary failure. The client’s ability to recoup some losses may be limited to: system provider, the market, the clearing and/or the limited liabilities set by the membership company. These limited liabilities may vary.
4. Electronic transaction
Trading through the electronic transaction system may be not only different from the transaction in the open-outcry market, but also different from transactions on other electronic systems. If the clients are engaged in the trading through one electronic system, the clients will face the relevant risks of the system, including hardware and software failures. System failure may cause the client order is difficult to be executed in accordance with the instruction or may not be implemented.
5. Curb exchange in the exchange
In some judicial districts, and only in limited circumstances, the company can be allowed to conduct curb exchange. The company that takes transaction for clients is likely to be the client’s counterparty. “ACU Bullion Limited” is the direct counterparty of the clients in a lot of precious metals transactions. “ACU Bullion Limited” shall have the right to refuse to accept or guarantee any order. So it may be difficult or impossible to close the existing positions, evaluate value, determine a fair price or assess risk. In view of these reasons, the transaction may involve greater risk. The curb exchange may be less regulated or managed in different regulatory systems. Before starting transaction, clients should understand the applicable provisions and the accompanying risks.
6. Transaction in other judicial districts
The transaction in other judicial districts (including the market with formal connection to the local market) may enable clients to face other risks. Under the terms of the market, the insurance of investors might be different or even reduce protection to investors. Before starting the transaction, the clients should inquire any of provisions related to the transactions with clients. The client’s local regulators will not be able to enforce the regulations of management authority or market in other judicial districts where the clients take transaction. The clients shall determine and know the compensation of the location itself and other judicial districts.
7. Conditions and terms for precious metal transaction
Clients must inquire the conditions and terms of buying precious medals as well as related obligations.
8. Suspending or restricting the relation between transaction and pricing
Market conditions (such as liquidity) as well as, or some market regulations (e.g., due to price limits or market close, any suspended transaction of precious metals), may increase the risk of loss, because it is very difficult or impossible to close and hedge positions. Furthermore, the price relationship between related assets and precious metals may no longer exist, the lack of reference price for related assets, making it difficult to judge "fair" price.
9. Transaction commission and other charges/strong>
Before start trading, clients should know all commission, fees and other charges that the clients will pay. These charges will affect the client's profit or increase the loss of the clients.
10. Deposit cash and property
The clients must be familiar with the various insurances for money and property that the clients use to take local or foreign exchange, especially in insolvency or bankruptcy of the company. The degree for clients to withdraw cash and property is subject to specific legislation or local rules. In some judicial districts, when liquidation has deficit, it is specially marked that all of the property of the client will be distributed in proportion with the cash.
This agreement has legally binding force. Please carefully read it!
The legal contract was made by the successor or alienator of " ACU Bullion Limited " (hereinafter referred to as " ACU Bullion "), a limited company founded in Hong Kong with the contract party (hereinafter referred to as "client"). About " ACU Bullion " opening the account to be conveniently engaged in the speculation or buying and/or selling spot precious metals in the OTC market of precious metals (OTCGOLD), clients confirm to have known the following transaction factors about OTCGOLD and the risk disclosure statement is provided for clients.
1. OTCGOLD transaction is only application for professional institutions or personnel, whose financial resources can undertake the loss that might be far more than cash deposit or deposit cash value.
2. The business of OTCGOLD is not conducted in the organized market, so there is no need of opening outcry.
3. Although many computer-based systems provide the quotation and the actual price, they may vary due to market illiquidity. Many electronic trading devices are supported by the computer-based system to carry out the trade order, execution, matching. Same as all devices and systems, they are susceptible to be influenced by temporary failure. Client’s ability to recoup some losses may be restricted to the liability limits set by system provider, the market bank and/or financial institutions. These limits may not the same.
4. In the OTCGOLD market, the company not only does the curb exchange. ACU Bullion that takes transaction for clients may be clients’ transaction rivals. It is difficult or impossible to close positions (in this case), evaluate value, and determine the fair value or assess risk exposure. In view of these reasons, this kind of transaction may involve greater risk. The curb exchange may be less regulated or regulated in different regulatory systems. Before starting the transaction, clients should understand the applicable provisions and the accompanying risks.
5. No one can guarantee the counterparty’s credibility. ACU Bullion will do the best to only trade with the institutions and the clearinghouse with good reputation. Moreover, it is likely to have such circumstance, namely the decrease of transaction liquidity causes the transaction of precious metals is stopped, thereby preventing closing an adverse position, which may lead to considerable financial loss.
6. Clients confirm buying or selling precious metals, including making delivery. The spot transaction should be accounted in the client’s account every time.
7. The policy of cash deposit of ACU Bullion as well as the policy of the organization/clearinghouse to execute the transaction may require clients to provide additional funds in order to maintain their cash deposit accounts, and clients have an obligation to meet such cash deposit requirements. Otherwise, it will probably bring position liquidation and the corresponding loss. ACU Bullion also reserves the right to refuse to accept the order or provide market hedge.
8. The transaction in an electronic transaction system may be not only different from the transaction of interbank market, but also different from the transaction on other electronic systems. If the clients are engaged in a one electronic transaction market, the clients will face the risk associated with the system, including hardware and software failures. System failure may cause client order is difficult to be conducted in accordance with the instruction or not executed at all.