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Risk & Other Disclosures

Risk Disclosure Statement

JSC “Dukascopy Europe IBS” (hereinafter – “Dukascopy Europe”) informs you about the risks of financial instruments that might arise when carrying out transactions, using brokerage services. Due to the complexity of the financial instruments and the variety of market situations the information contained in this part cannot disclose all the risk types associated with the services which Dukascopy Europe may offer to you. Dukascopy Europe informs you that the list of the risk types is not exhaustive and includes only the most essential risks. It is a general description that gives you information about the risks associated with financial instruments. You should not deal in these financial instruments unless you are able to understand the nature and the extent of your exposure to risk and, therefore, to take an investment decisions on an informed basis.

Risks:

Credit risk is the risk of loss caused by borrowers, obligors or counterparties failing to fulfill their obligations on the due date or at any time thereafter.

Financial instrument issuer’s risk —possible decrease of value of financial instrument due to poor financial performance of the issuer;

Market risk – the risk that affects the performance of the entire industry/ financial market. The risk depends on the functioning of the financial market. Market risk consists of the currency risk, interest rate risk, price risk and liquidity risk.

 

  • Currency risk — the risk of loss caused by the unfavorable changes in currency rates.
  • Interest rate risk — the risk of loss caused by unfavorable changes in interest rates.
  • Price risk — the risk of a decrease of the market value of the client’s investment caused by the price fluctuations of the financial instruments.
  • Liquidity risk – the risk that a sale of the financial instruments is difficult or impossible due to insufficient market liquidity in the financial market.

 

Information risk – the risk of loss caused by incomplete, asymmetric information on market trends, prices of the financial instruments etc.

Political risk – possible loss of investment due to any events that affect the political or economic situation in the country or region and as a result influence activities of the companies operating in the relevant market(s).

Legal risk - the risk of loss resulting from failure of counterparties to comply with existing legislation, contractual obligations and prudent ethical standards that may cause additional costs.

Tax risk – the risk of a decrease in returns on investments.

Operational risk – “the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events”.1

Risk factors may occur simultaneously and may lead to an unpredictable effect on the value of your investment.

The use of financial leverage may significantly increase the impact of risks on investor by multiplying potential positive or negative outcome.

Clients may suffer loss caused by faults or failures of trading systems, errors in transaction execution technology. Additionally, clients may be exposed to the risk of unauthorized access by third party to trading platform by using clients’ name.

Risks associated with investments in certain financial instruments

Shares: credit risk, market risk, price risk, liquidity risk, legal risk, tax risk etc.

Exchange-traded fund (ETF): price risk, liquidity risk, legal risk etc.

Bonds: credit risk, market risk, interest risk, liquidity risk etc.

 

 
1Basel Committee on Banking Supervision, Operational Risk, Consultative Document, Bank for International Settlements, January 2001.