OANDA Asia Pacific Risk Disclosure Statement
IMPORTANT - READ CAREFULLY:
OANDA Asia Pacific Pte. Ltd. (“OANDA”) believes that its customers should be aware of the risks involved in entering over-the-counter contracts for foreign currency, precious metals, and contracts for differences (“CFDs”) (collectively, “OTC Contracts”). The following is a brief non-exhaustive summary of certain more significant factors and special risks you should take into account when deciding whether to trade in OTC Contracts. In order to open and operate an fxTrade account with OANDA, you must indicate that you have read and understood this Statement. Please read this Statement in its entirety.
When you enter into an OTC Contract with OANDA, you will be entering into a privately negotiated contract with OANDA, as principal. This means that OANDA acts as the seller when you buy and the buyer when you sell. OTC Contracts are not transferrable to other providers, and must be closed with OANDA. OTC Contracts are not executed on an exchange and are not cleared on a central clearing organisation. They are obligations of OANDA and you may not be afforded all of the regulatory and financial protections offered by exchange-traded contracts. Both you and OANDA are obliged to perform your respective obligations under each transaction in accordance with its terms. The terms of each OTC Contract are set out in OANDA’s fxTrade Customer Agreement, which applies to every transaction you enter into with OANDA.
OANDA establishes the prices at which it offers to trade with you based on prices that are made or quoted to OANDA by the banks, financial institutions, exchanges and counterparties with which it does business and which may not be the same as prices available from other sources. These prices depend on fluctuations in the financial markets, which are outside OANDA’s control. Financial markets in general and these products in particular are volatile and can move rapidly, particularly in response to news events. In addition the assets underlying CFDs are different from one another and there are specific risks for each item. These assets also differ from currencies (and different currencies also carry different risks). The past performance of an underlying asset, CFD or currency is not an indicator of future performance.
There may be instances where OANDA does not receive a price in respect of certain or all underlying assets due to market disruption or closure. OANDA may prohibit opening or closing a position if OANDA does not have pricing data available in respect of the underlying asset or currency. These situations involve risk for you, as there may be market changes while you are unable to trade and this could adversely affect any open positions.
In entering into OTC Contracts you should understand that OANDA is acting solely in the capacity of an arm’s length contractual counterparty to you and not in the capacity of your financial advisor or fiduciary. Accordingly, you should not regard any information, proposal, suggested trade or trading strategy or other written materials or oral communications from OANDA as investment recommendations or advice or as expressing OANDA’s views as to whether a particular transaction is appropriate for you or meets your financial objectives.
Transactions in OTC Contracts carry a high degree of risk. The amount of initial margin is small relative to the value of the OTC Contracts so that transactions are “leveraged” or “geared”. A small market movement will have a proportionally larger impact on your position and this may work against you as well as for you. The possibility exists that you could sustain a total loss of initial margin funds and any additional deposits made to maintain your position. We recommend that you familiarise yourself with CFD and currency trading with OANDA using an fxTrade Practice account before using fxTrade.
In view of the risks, you should trade in OTC Contracts only if you understand the contracts (and contractual relationships) into which you are entering. Trading in OTC Contracts is only appropriate for sophisticated individuals and institutional investors and is not appropriate for many members of the public. You should consider whether trading is appropriate for you in light of your experience, objectives, financial resources, risk tolerance and other relevant circumstances. Most importantly, do not invest money that you are not in a position to lose.
OANDA’s trading system, fxTrade, is designed to automatically liquidate all open positions if your margin deposit is in jeopardy so that you cannot lose more than the funds you have on deposit in your trading account. Margin closeouts may occur without warning in accordance with OANDA’s Margin Rules and all your open positions will be closed. You are responsible for monitoring your account to avoid unexpected margin closeouts. To limit your losses OANDA encourages you to employ such risk-reducing strategies as “stop-loss” or “stop-limit” orders, but you should be aware that market conditions may make it impossible to close out your order at the level specified.
There are risks associated with using an Internet-based trade execution software application including, but not limited to, the failure of hardware and software. While OANDA maintains back up systems and contingency plans to minimize the possibility of system failure, OANDA does not control signal power, reception, routing via the Internet, configuration of your equipment or the reliability of your connection to the Internet. The result of any failure of the foregoing may be that your order is either not executed according to your instructions, or is not executed at all.
OANDA’s hours of operation coincide with the global financial markets. Trading is available from Sunday approximately 5 p.m. to Friday 5 p.m. (Eastern) New York time. During weekends you will not be able to close existing positions or open new positions. Also, spreads (the difference between the bid price and the ask price) typically widen at 4:15 p.m. Friday, to reflect decreased liquidity in the global markets. And, it is possible for market prices to significantly change or “gap” when trading resumes on Sunday. Therefore, you must ensure that you maintain sufficient margin in your fxTrade account at all times to avoid a margin closeout. To reduce the risk of a margin closeout, reduce or close your overall positions or add more funds to your fxTrade account and to prevent unwanted order execution, consider widening your take profits, stop losses or trailing stops prior to the weekend.
As a Capital Markets Services licence holder, licensed by Monetary Authority of Singapore, OANDA is required to and has set up a trust account at a major bank registered and licensed in Singapore. All funds you send to OANDA must be deposited in this trust account, and held there in trust for you. This means that your funds are segregated and maintained separately from OANDA own funds, and can only be withdrawn as a direct result of your trading-related activities or withdrawal requests. No withdrawals can be made from this account for any OANDA operations.