This risk disclosure and warning notice is provided to each client or prospective client (Hereinafter, the “Client”) in accordance with the following regulations: the Provision of Investment Services, the Exercise of Investment Activities, the Operation of Regulated Markets and Other Related Matters Law 144(I)/2007, as periodically amended (“the Law”).
The following risk disclosure and warning section shall be read carefully by the Client, before applying to the Chartoption Company for a trading account and before any financial transaction.
However, this document does not disclose or explain all of the risks and other significant aspects involved in dealing in Binary Options. The following section aims only to explain in general terms, the nature of the risks involved when dealing in Binary Options on a fair and non-misleading basis.
What are the risks?
Trading in Binary Options is VERY SPECULATIVE AND HIGHLY RISKY and so, not suitable for the general public but only for those investors who:
(a) Understand and are willing to assume the economic, legal and other risks involved in doing a transaction in binary options (Hereinafter, a “Transaction”).
(b) Take into account their personal financial situation, financial resources, life style and obligations and therefore, are able to assume the possible loss of their entire investment.
(c) Have the knowledge to understand Binary Options trading and the underlying assets and markets.
The Company will not provide the Client with any advice relating to Binary Options, the underlying assets and markets or make investment recommendations of any kind. Therefore, if the Client does not understand the risks involved, he should priory be advised and consult an independent financial counsel. If the Client still does not understand the risks involved in trading in Binary Options, he should not trade at all.
Binary Options are derivative financial instruments deriving their value from the prices of the underlying assets/markets in which they refer to (for example currency, equity indices, stocks, metals, indices futures, forwards etc.). Although the prices at which the Company trades are set by an algorithm developed by the Company, the prices are derived from the underlying assets /market.
The Client shall understand the risks associated with trading in the relevant underlying asset/ market because fluctuations in the price of the underlying asset/ market will affect the profitability of his transaction.
Here is a non-exhaustive list of the existing risks:
Volatility: movements in the price of underlying assets/ markets can be volatile and unpredictable. This will have a direct impact on the Clients profits and losses. Understanding the volatility of an underlying market will help the Client to understand how to trade and how much he is ready to lose.
Market liquidity: The prices of Binary Options will be influenced by, among other things, modification of the supply and demand, governmental, agricultural, and commercial and trade programs policies, national and international political and economic events. Consequently, the prevailing psychological characteristics of the relevant market place and some of the Binary Options’ underlying assets may not become immediately liquid as a result of the reduce of the demand for the underlying asset. Therefore, market conditions can change significantly in a very short period of time and hence, under certain market conditions. Client’s Order is not executed and consequently losses are incurred.
Due to movements and/or conditions occurring at any moment of the day, (weekend, in the beginning of week or intra-day) as a consequence of significant macroeconomic figures, economic or political news, and currency markets can suddenly open with price levels substantially different from previous prices.
Market swings: swing is a sudden shift in the price of an underlying asset price from one level to another. Various factors can lead to gapping (for example, economic events or market announcements) and gapping can occur both when the underlying market is open and when it is closed. When these factors occur while the underlying market is closed, the price of the underlying market when it reopens (and therefore our derived price) can be markedly different from the closing price, with no opportunity to close your transaction in-between. ‘Gapping’ can result in a significant loss (or profit).
The Client has no rights or obligations in respect of the underlying instruments or assets relating to the Binary Options he is trading.
Binary Options offered by the Company are not listed and/or traded on any regulated exchange. The prices and other conditions are set by the Company, and the calculation of the price to be paid (or the payout to be received) at the time the contract is purchased or sold, will be based on the Company’s best estimate of underlying market prices and the expected level of interest rates, taking into account volatilities and other market conditions during the life of the contract.
The prices and other conditions are based on complex arithmetic calculations.
Binary options trading can only be settled in cash and there is no delivery of the underlying asset.
Need to know:
Before trading, the Client shall obtain the details of all the taxes he is in charge of.
The Provision of Services by the Company is subject to charges, and/or taxes, as detailed in the Company’s website. It is the Client’s responsibility to check periodically and be updated of any changes occurring to charge amounts or nature.
There is no guarantee that no tax and/or any other duty are to be paid. There is a risk inherent to Binary Options trading that some tax and/or any other duty shall apply to a transaction. (For example: legislation or Client personal circumstances). The Client is responsible for any taxes and/or any other duty which may accrue in respect of his trades.
Company’s prices are set by the Company and may be different from prices reported elsewhere. The Company’s trading prices are the ones at which the Company is willing to sell Binary Options to its Clients at the point of sale. As such, they may not directly correspond to real time market levels.
What are third party’s risks?
The Company may transfer the money received from a Client to a third party (e.g. a bank or broker) for hold or control, in order to make a transaction through or with such third party. The Company has no responsibility for any act or omission of this third party. The Company has the right to withhold Client’s money on the Client’s behalf outside the EEA. The legal and regulatory regime applying to any such bank or person will be different from that of Cyprus and in the event of the insolvency or any other similar proceedings in relation to that bank or person, the Client’s money may be treated differently from the treatment which would apply if the money was held with a bank in an account in Cyprus. The Company will have no liability with regard to such insolvency, acts or omissions of any third party referred to in this paragraph.
The Company is allowed to transfer Client’s money to a third party who may have a security interest, lien or any other right of set-off in relation to that money.
A Bank or Broker dealing with the Company may have interests contrary to the Client’s Interests.
In the event of the insolvency or any other similar proceedings in relation to that third party, the Company may only have an unsecured claim against the third party on behalf of the Client, and the Client will be exposed to the risk that the money received by the Company from the third party is insufficient to satisfy the claims of the Client in respect of the relevant account. The Company shall have no liability or responsibility for such losses.
The Company’s insolvency or default, may lead to positions being liquidated or closed out, without the Client’s consent.
The Client -not the Company- shall be solely responsible for the risks of financial losses caused by failure, malfunction, interruption, disconnection or malicious actions of information, communication, electronic or other systems.
If the Client undertakes transactions on an electronic system, he will be exposed to risks associated with the system including the failure of hardware, software, servers, communication lines and internet failure. The result of any such failure may be that his Order is either not executed according to his instructions or it is not executed at all. The Company shall have no liability in the case of such a failure.
The Company has no responsibility if unauthorized third persons have access to information, including electronic addresses, electronic communication and personal data, access data when the above are transmitted between the Company or any other party, using the internet or other network communication facilities, telephone, or any other electronic means.
The Client acknowledges that the unencrypted information transmitted by e-mail is not protected from any unauthorized access.
At time of excessive deal flow the Client may have some difficulties to be connected over the phone or the Company’s trading platform(s)/system(s), especially in fast Market (for example, when key macroeconomic indicators are released).
The Client acknowledges that the internet may be subject to events which may affect his access to the Company’s website and/or the Company’s trading platform(s)/system(s), including but not limited to interruptions or transmission blackouts, software and hardware failure, internet disconnection, public electricity network failures or hacker attacks. The Company is not responsible for any damages or losses resulting from such events which are beyond its control or for any other losses, costs, liabilities, or expenses (including, without limitation, loss of profit) which may result from the Client’s inability to access the Company’s Website and/or Trading System or delay or failure in sending Orders or Transactions.
The Client is aware that when trading in an electronic platform he assumes risk of financial loss which may be a consequence of among other things:
Failure of Client’s devices, software and poor quality of connection.
The Company’s or Client’s hardware or software failure, malfunction or misuse.
Improper work of Client’s equipment.
Wrong setting of Client’s Terminal.
Delayed updates of Client’s Terminal.
In connection with the use of computer equipment and data and voice communication networks, the Client in charge of the following risks among other risks and in such cases, the Company has no liability of any resulting loss:
Power cut of the equipment on the side of the Client or the provider, or communication operator (including voice communication) that serves the Client.
Physical damage (or destruction) of the communication channels used to link the Client and provider (communication operator), provider, and the trading or information server of the Client.
Outage (unacceptably low quality) of communication via the channels used by the Client, or the channels used by the provider, or communication operator (including voice communication) that are used by the Client.
Wrong or inconsistent with requirements settings of the Client Terminal.
Untimely update of the Client Terminal.
When carrying out transactions via the telephone (land or cell phone lines) voice communication, the Client runs the risk of problematic dialing, when trying to reach an employee of the broker service department of the Company due to communication quality issues and communication channel loads.
The use of communication channels, hardware and software, generate the risk of non-reception of a message (including text messages) by the Client from the Company.
Trading over the phone might be impeded by overload of connection.
Malfunction or non-operability of the trading system (platform), which also includes the Client Terminal.
Outage (unacceptably low quality) of communication via the channels used by the Company, in particular physical damage (destruction) of the communication channels by third parties.
What kind of trading Platform?
The Client acknowledges that only one Instruction is allowed to be in the queue at one time. Once the Client has sent an Instruction, any further Instructions sent by the Client are ignored and the “Orders is locked” message appears until the first Instruction is executed.
The Client acknowledges that the only reliable source of Quotes Flow information is that of the live Server’s Quotes Base. Quotes Base in the Client Terminal is not a reliable source of Quotes Flow information because the connection between the Client Terminal and the Server may be disrupted at some point and some of the Quotes simply may not reach the Client Terminal.
The Client acknowledges that when the Client closes the Order placing/ deleting window or the position opening/closing window, the Instruction, which has been sent to the Server, shall not be cancelled.
In case of Force Majeure Events the Client shall accept the risk of financial loss.
Investor Compensation Fund
The Company participates in the Investor Compensation Fund for clients of Investment Firms regulated in the Republic of Cyprus. Certain clients will be entitled to compensation under the Investor Compensation Fund where the Company fails. Compensation shall not exceed twenty thousand Euro (EUR 20.000) for each entitled Client. For more details please refer to the “Investor Compensation Fund” found on our website.
The Company will not advise the Client about the merits of a particular Transaction or give him any form of investment advice and the Client acknowledges that the Services do not include the provision of investment advice in Binary Options or the Underlying Markets. The Client on his own will enter into Transactions and take relevant decisions based on his own judgment. By asking the Company to enter into any Transaction, the Client represents that he has been solely responsible for making his own independent appraisal and investigation of the risks of the Transaction. He represents that he has sufficient knowledge, market sophistication, professional advice and experience to make his own evaluation of the merits and risks of any Transaction. The Company gives no warranty as to the suitability of the products traded under this Agreement and assumes no fiduciary duty in its relations with the Client.
The Company has no obligation to provide the Client with any legal, tax or other advice relating to any Transaction. The Client should priory obtain an independent expert advice if he has any doubt as to whether he may incur any tax liabilities. The Client is hereby warned that tax laws are subject to change from time to time.
The Company may, from time to time and at its discretion, provide the Client (or in newsletters which it may post on its Website or provide to subscribers via its Website or the Trading Platform or otherwise) with information, recommendations, news, market commentary or other information but such general information cannot be assimilated to a service due by the Company. Nevertheless:
(a) The Company will not be responsible for such information;
(b) The Company gives no representation, warranty or guarantee as to the accuracy, correctness or completeness of such information or as to the tax or legal consequences of any related Transaction;
(c) This information is provided solely to enable the Client to make his own investment decisions and cannot be assimilated to an investment advice or unsolicited financial promotions to the Client;
(d) If the document contains a restriction on the person or category of persons for whom that document is intended or to whom it is distributed, the Client agrees that he will not pass it on to any such person or category of persons;
(e) The Client accepts that prior to dispatch, the Company may have acted upon it itself to make use of the information on which it is based. The Company does not make any representations as to the time of receipt by the Client and cannot guarantee that he will receive such information at the same time as other clients.
Market commentary, news, or other information provided or made available by the Company are subject to change and may be withdrawn at any time without notice.
No Profit guaranty
The Company or any of its representatives does not provide any guarantee of profit or absence of losses, when trading in Binary Options.
The Client is aware of the risks inherent in trading in Binary Options and is financially able to bear such risks, despite any losses incurred.