RISK DISCLOSURE

• 1. Futures
  
  

  1.1 Nature of Futures
  
  

  Futures is a contract in which parties are bound to perform their obligations there under. Unless a party is able to offset its position before the settlement date, the seller of futures is obliged to make and the buyer is obliged to take delivery of the underlying asset of the contract (physical delivery), or a party may make cash settlement where the cash difference between the exercise price and the market value of price of the underlying asset or variable at a time or a period of time in the future as set out in the contract is paid to the other party.
  
  

  1.2 Risk of Loss in Trading Futures
  
  

  In futures trading, buyers (a party with long position) and sellers (a party with short position) are required to make an initial margin deposit with their futures agent to secure their performance under futures contracts. Since the amount of initial margin is small compared to the contract’s value, a relatively small movement of the market can lead to either large losses or gains within a short period of time. The Client may sustain losses significantly beyond the amount of initial margin deposit it has made or may be called upon by its agent to liquidate its position at a loss should it be unable to provide additional margin funds within a specified period.
  
  

  2. Options
  
  

  2.1 Nature Options
  
  

  Options is contract in which the seller gives the buyer the right to buy or sell the underlying asset at a fixed price within a specified period of time and conditions, or the right to receive payment from the seller under the conditions specified in the contract. The buyer is required to pay a premium to the seller in exchange for such right to buy or sell.
  
  

  Options which grants the buyer the right to buy an underlying asset or variable at a fixed price is a call options while options which grants the buyer the right to sell an underlying asset or variable at a fixed price is a put options. Such right must be exercised according to the terms and conditions specified in an options contract.

   

  When the buyer exercises his options, the seller may make physical delivery of the underlying asset or make cash settlement where the cash difference between the exercise price and the market value or price of the underlying asset of variable at a time or a period of time in the future as set out in the contract is paid to the buyer.

   

  2.2 Risk of Loss from Options Trading
  
  

  A buyer of options may choose to offset his position or exercise the options or can simply allow the options to lapse. If the Client chooses to exercise the option, he/she will receive a cash settlement where the cash difference between the exercise price and the market value or price of the underlying asset or variable at a time or a period of time in the future as set out in the contract is paid to the buyer. Otherwise the Client may choose to make or take delivery of the underlying asset (physical delivery) where it will receive payment of or pay for the underlying asset delivered or taken at the exercise price specified under the contract. If options expire worthless, the buyer’s loss equals the amount of premium.

   

  A seller (writer) of options receives premium from a buyer and is bond of perform his obligation should the buyer exercise the options. The seller is required to make margin deposit. Upon the buyer’s exercise of options, the seller who does not offset his position is required to either make the cash settlement where the cash difference between the exercise price and the market value or price of the underlying asset or variable at a time or a period of time in the future as set out in the contract is paid to the buyer, or make or take delivery of the underlying asset (physical delivery) where he will receive payment of or payment of or pay for the underlying asset delivered or taken at the exercise price specified under the contract. If options expire worthless, the seller’s gain equals the amount of premium.

   

  Due to the fact that the maximum loss of a buyer of options is limited to the premium, he/she is to pay the premium but is not required to make margin deposit. On the other hand, the seller’s losses can be unlimited therefore he is required to make margin deposit with a derivatives agent to secure his/her performance under the options similar to the case of futures trading.

   

  With an unfavourable movement in the market against his/her position, a seller of options may sustain a loss well in excess of the amount of margin deposit made within a relatively short period of time.

   

  3. Additional Risks and Other Information Concerning Futures and Options Trading
  
  

  3.1 Understanding Terms and Conditions of Derivatives Contract
  
  

  Since derivatives trading carries a high degree of risk, therefore, prior to making investment decisions, the Client should carefully study and understand each category of contract specifications, including, but not limited to, type of underlying assets and variables, contract size/unit/multiplier, last trading day, settlement day, delivery or settlement method, and the delivery or reference price used to determine settlement price and margin requirements. The Client should consider if the investment is suitable for his/her investment purpose and financial status or not.

   

  With respect to trading options, the Client should also understand other relevant terms and conditions, including type of options, e.g. put options or call options, exercise conditions, type of underlying assets and variables, etc. The Client should consider if the investment is suitable for his/her investment purpose and the risk exposure is acceptable or not. The Client should also consider a potential of return on acquiring a position, amount of premium and transaction fees and possible losses

   

  3.2 Fees on Derivatives Trading
  
  

  Prior to trading, the Client should obtain from his/her derivatives agent clear explanation of all fees and other charges for which it will be liable relating to trading, settlement or exercise of options, e.g. commission, exercise fee, etc. These charges add to the Client’s investment costs and will affect loss and gain as well as the Client’s investment decision. Commission may vary depending on type and volume of transactions. The Thailand Futures Exchange Plc and the Office of the Securities and Exchange Commission prescribe no regulation on commission rates.

   

  3.3 Risk of Liquidating Position and Liabilities for Resulting Loss
  
  

  When the Client establishes certain positions on derivatives, i.e. long futures, short futures and short options, he/she is obliged to perform its obligations under the contract. The Client’s derivatives contract with such position will be marked to market by its derivative agent at least at the end of business day to reflect a daily gain or loss from the Client’s position. Should the loss sustained by the Client’s position in t h e m a r k e t cause the balance in its margin account to drop below the maintenance margin, the Client will be called by his/her derivatives agent to deposit an additional fund to maintain its initial margin within a specified period of time. If the Client does not provide the required margin within the time required by his/her derivatives agent, the Client’s position may be liquidated, and the Client will be liable for any resulting loss from such liquidation.

   

  The derivatives agent may also include a forced closeout as an additional term in a Contract

  Appointing Derivatives Brokerage or its trading regulation, that is when the Client’s balance in its margin account drops to the forced closeout point, the derivatives agent will call the Client to deposit additional margin during trading hours. If the Client does not provide the required margin within the time set out in the agreement or the regulation, the derivative agent is entitled to close out the Client’s position, and the Client will be liable for any resulting loss from such closeout.

   

  Clients who maintain a position in derivatives, whether for their own account or through third party, in excess of the amount determined by the Derivatives Exchange and are unable to offset such excessive position as informed by their derivatives agents will be exposed to the similar foregoing risk.

   

  3.4 Risk Associated with Failure to Offset Position
  
  

  Should the client be unable to offset its derivatives position before the settlement date due to unfavourable market conditions, e.g. illiquidity, trading halt in the market, and etc , the Client may sustain a loss due to its outstanding position in derivatives contracts at settlement date.

   

  3.5 Risk Associated with Failure to Execute Stop Loss Order
  
  

  A derivatives agent may not be able to execute some types of orders, such as “stop-loss” or “stoplimit” orders, placed by the Client to limit his/her losses, since market conditions at

   

  3.6 Fees on Derivatives Trading
  
  

  Prior to trading, the Client should obtain from his/her derivatives agent clear explanation of all fees and other charges for which it will be liable relating to trading, settlement or exercise of options, e.g. commission, exercise fee, etc. These charges add to the Client’s investment costs and will affect loss and gain as well as the Client’s investment decision. Commission may vary depending on type and volume of transactions. The Thailand Futures Exchange Plc and the Office of the Securities and Exchange Commission prescribe no regulation on commission rates.

   

  3.7 Risk of Liquidating Position and Liabilities for Resulting Loss
  
  

  When the Client establishes certain positions on derivatives, i.e. long futures, short futures and short options, he/she is obliged to perform its obligations under the contract. The Client’s derivatives contract with such position will be marked to market by its derivative agent at least at the end of business day to reflect a daily gain or loss from the Client’s position. Should the loss sustained by the Client’s position in t h e m a r k e t cause the balance in its margin account to drop below the maintenance margin, the Client will be called by his/her derivatives agent to deposit an additional fund to maintain its initial margin within a specified period of time. If the Client does not provide the required margin within the time required by his/her derivatives agent, the Client’s position may be liquidated, and the Client will be liable for any resulting loss from such liquidation.

   

  The derivatives agent may also include a forced closeout as an additional term a contract Appointing Derivatives Brokerage or its trading regulation, that is when the Client’s balance in its margin account drops to the forced closeout point, the derivatives agent will call the Client to deposit additional margin during trading hours. If the Client does not provide the required margin within the time set out in the agreement or the regulation. The derivative agent is entitled to close out the Client’s position, and the Client will be liable for any resulting loss from such closeout.

   

  Client who maintains a position in derivatives, whether for their own account or through third party, in excess of the amount determined by the Derivatives Exchange and are unable to offset such excessive position as informed by their derivatives agents will be exposed to the similar foregoing risk.

   

  3.8 Risk Associated with Failure to Offset Position
  
  

  Should the client be unable to offset its derivatives position before the settlement date due to unfavourable market conditions, e.g. illiquidity, trading halt in the market, and etc. the Client may sustain a loss due to its outstanding position in derivatives contracts at settlement date.

   

  3.9 Risk Associated with Failure to Execute Stop Loss Order
  
  

  A derivatives agent may not be able to execute some types of orders, such as, “stop-loss” order, placed by the Client to limit his/her losses, since market conditions at the time the order is placed may make it impossible to match such orders.

   

  3.10 Risk from Position Restriction or Prohibition
  
  

  The Derivatives Exchange, the Clearing House or the Office of Securities and Exchange Commission may order derivatives agents to restrict or prohibit a client from acquiring further position, to close its trading account or to liquidate his/her position if the client’s derivatives transactions have or may have affected the integrity of derivatives trading in the Derivatives Exchange, or have or may have caused the price of derivatives traded in the Derivatives Exchange to be inconsistent with the normal market condition, or are inappropriate or may violate the law governing derivatives; or if the client fails, upon

  request of the Derivatives Exchange, the Clearing House or the office of Securities and Exchange Commission, to inform or provide information, or gives false or misleading explanation or information to its derivatives agent, the Derivatives Exchange, the Clearing House or the Office of Securities and Exchange Commission.

   

  The Office of Securities and Exchange Commission may also order the Derivatives Exchange or the Clearing House to suspend trading or restrict or liquidate position of client where it is necessary to maintain the stability of the financial and economic system of the country, or to maintain the stability of the trading and settlement system of the derivatives market.