Core Spreads Risk Disclosure Notice
Before you start trading with Core Spreads, you must carefully consider whether trading in derivatives is appropriate for you, based on your personal circumstances, financial objectives, financial needs and trading experience.
Core Spreads offers Spread Trades (STs), which are over-the-counter (OTC) derivatives, on a variety of financial assets classes including indices, FX, shares, cryptocurrencies and commodities. ST products are speculative products which are not suitable for all investors. ST products are leveraged investments and by investing in them you are exposed to much greater risk of financial loss than other types of conventional investments such as share trading. You may incur a loss equal to the amount you invest. In deciding whether to trade in such instruments you should be aware of the following points:
Core Spreads reduces financial exposure by entering into corresponding trades with counterparties. There is a risk that the counterparty defaults on its obligations to us which could impact on our ability to meet our obligations to you. If we default on our obligations, you may become an unsecured creditor in an administration or liquidation, and you will not have recourse to the underlying assets in the event of our insolvency.
The nature of STs means that a relatively small move in the price of the underlying instrument to which your ST transaction relates can cause an immediate and substantial loss to you, including a loss equal to the amount of your investment.
Orders, other than Guaranteed Stop orders, are not guaranteed so reliance on an
order is a risk. It is your responsibility to manage orders. Any order which you have placed and have not cancelled may be filled by us and therefore you may incur losses as a result of that order.
Gapping refers to an occurrence whereby our quote moves from one price to the next price, through an order level. This may be because the underlying instrument to which the ST Transaction relates has stopped trading and recommences trading at a price below or above a stop loss order level or may trade in insufficient size as represented by the size of your order, for Core Spreads to have been reasonably able to place a trade in the underlying instrument. When gapping occurs orders are executed at our quote based upon the first price that we are reasonably able to obtain in the underlying instrument. Accordingly, where you have an order you must understand the potential impact of gapping.
The STs provided by Core Spreads are OTC products. This means that they are not traded on a licensed financial market such as an exchange. Therefore, by trading in OTC STs with us you will not have the benefit of some of the advantages of trading on a licensed market, such as having a central clearing house to guarantee our obligations to you.
Dealing Spread Risk
For all STs we incorporate our fees in the spread. There may be circumstances in which the spread that we charge you to close a ST transaction may be greater than the spread that we charged you to open the ST transaction and vice-versa. In such a scenario you may face greater costs in closing a position than anticipated. Dealing spread may vary depending on trading lours as listed in the Market Information Sheets and are subject to change in times of volatile market conditions.
Our STs are typically traded over the internet which means that you are exposed to the operational risks associated with online trading such as the reliability of your internet connection, the stability of the trading platform and the reliability of network connections and computer hardware. Such system, trading platform or hardware failure could prevent you from implementing your desired trading strategy and could cause you to suffer loss. In the event of connectivity problems you can contact us immediately to manage your account by telephone.
Financial markets can be very volatile. Unpredictable events can cause the market of an underlying instrument to move rapidly on little to no trading activity. In such circumstances it may become very difficult, if not impossible, to execute your orders according to your instructions or at all, which could cause you to suffer loss. In other circumstances there may be low trading volumes for the underlying instrument to which the ST Transaction relates and Core Spreads, in accordance with the Client
Agreement, may limit the size of ST transactions that we are able to provide, which presents a risk to you fulfilling your desired trading strategy.