Form 64 - Risk disclosure document (exchange contracts) [F - Rescinded]
| Published Date: | 1995-12-15 |
|---|---|
| Effective Date: | 1996-01-01 |
| Rescinded Date: | 1999-06-30 |
This is the form of risk disclosure document for brokers, investment dealers, exchange contracts dealers, portfolio managers and investment counsel required under section 35 of the Securities Rules.
FORM 64
Securities Act
RISK DISCLOSURE DOCUMENT (EXCHANGE CONTRACTS)
INSTRUCTIONS
Brokers, investment dealers, exchange contracts dealers, portfolio managers and investment counsel are required to furnish each prospective client with a copy of the registrant's Risk Disclosure Document (Exchange Contracts), prior to opening the client's account, where the proposed account will be used to trade in or, in the case of portfolio managers and investment counsel to advise on, exchange contracts. Brokers, investment dealers and portfolio managers that furnish prospective clients with a Managed Accounts Disclosure Statement (Exchange Contracts) are not required to additionally furnish clients with this form.
Brokers, investment dealers and exchange contracts dealers are permitted to trade in, and portfolio managers and investment counsel are permitted to advise on, exchange contracts only if expressly registered to do.
CONTENTS OF FORM
The Risk Disclosure Document (Exchange Contracts) must contain the following statements:
"The risk of loss in trading exchange contracts can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. In considering whether to trade, you should be aware of the following:
a) If you purchase an exchange option or an exchange futures option you may sustain a total loss of the premium and of all transaction costs.
b) If you purchase or sell an exchange futures contract or sell an exchange option or exchange futures option you may sustain a total loss of the initial margin funds and any additional funds that you deposit with a dealer to establish or maintain your position. If the market moves against your position, you may be called upon by your dealer to deposit a substantial amount of additional margin funds, on short notice, in order to maintain your position. If you do not provide the required funds within the prescribed time, your position may be liquidated at a loss and you will be liable for any resulting deficit in your account.
c) Under certain market conditions, you may find it difficult or impossible to liquidate a position. This can occur, for example, when the market reaches a daily price fluctuation limit ('limit move').
d) The placement of contingent orders by you or by your registered representative, such as a 'stop-loss' or 'stop-limit' order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders.
e) All futures positions involve risk, and a 'spread' position may not be less risky than a simple 'long' or 'short' position.
f) The high degree of leverage that is often obtainable in exchange contracts trading because of 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.
This brief statement cannot disclose all the risks and other significant aspects of the exchange contracts markets. You should therefore carefully study this disclosure document and exchange contracts trading in general before you trade. You should also contact your dealer concerning the nature of protections available to safeguard funds or property deposited in your account."